Seeking Advice to Help Recently Widowed BIL

[ivinsfan]

Agreed. Given that BIL has at least one Presumptive Condition, I expect he'll be 10-20% Service Connected Disability, making him Group 3.

For those familiar with VA health care, what are your thoughts about how comprehensive it is if you're Group 3 and it's your only provider? I am VA Group 3 but, had Tricare @ age 60 and now have Primary-Medicare/Secondary-Tricare. So, I never really used much VA health care.

We have excellent VA care but our state is nationally ranked for good health care. Our local VA has no hesitation about referring to non VA providers in emergent or tricky situations. However a group of Vets my DH knows from other areas talk about inattentiveness, long appt waits and general poor interactions with their VA providers. So every vets experience can be different which isn't really acceptable but is reality. MY DH was referred to an outside nationally ranked heart center (local) for urgent attention... VA covered everything stemming from a 5 day hospital stay.



He would have been expected to stay in the VA system once the care became routine. He was almost 65 and because he wanted to retain good access to the non VA clinic we purchased him a good Medicare supplement. So we never actually had experience with the VA cardiac docs.



In reality its an individual choice ..the nice thing is you can have VA Medicare and supplement at the same time with no problems. Of course this won't help your BIL for another 5 years.

 

[ncbill]

He has what I'd call "hobby" jobs; raising and selling livestock (lives on 19 acres), which generates a few hundred $$$ per month. Honestly, I think he'd prefer to just do that if he can.

I hear you on the "draw down" of assets while deferring SS. But, that's easily analyzed to help choose the best path (financially at least). I'm using FireCalc to do quick comparisons. I plan to present that info to him, give some advice, and let him (and hopefully an FA) finalize the decision. However, I do like the ideas you, bc & others have suggested for the near term (7yrs +/-) regarding products with virtually no risk (CD ladder, etc.)

Regarding health care, I had the "Don't dare go naked!" talk and believe I've convinced him to use Cobra in the short term while he determines what VA care he may get.

Did he pay SS/Medicare taxes on those earnings?

All he needs is 10 quarters worth of earnings over the last 5 years to be eligible for SS disability.

For SS disability he'll want to hire a lawyer...they work on contingency & are paid a capped amount on the back-end only if he receives benefits:

https://www.nolo.com/legal-encyclopedia/how-much-does-social-security-disability-lawyer-cost.html

 

[EastWest Gal]

Wouldn't his eligibility for SS disability be based on his deceased wife's work history as well?

From ssa.gov:

https://www.ssa.gov/benefits/surviv...widower, full retirement,50 through 59 — 71½%.

"Certain family members may be eligible to receive monthly benefits, including:
A widow or widower age 60 or older (age 50 or older if they have a disability)."

 

[ivinsfan]

The BIL has a crushed hand which likely means he doesn't qualify for SS disability.. remember it's not being able to work at all not just not being able to do the job you were disabled from. IMO not worth expending the time and effort on. He'd be better served working on the VA end.

 

[Huston55]

Did he pay SS/Medicare taxes on those earnings?

All he needs is 10 quarters worth of earnings over the last 5 years to be eligible for SS disability.

For SS disability he'll want to hire a lawyer...they work on contingency & are paid a capped amount on the back-end only if he receives benefits:

https://www.nolo.com/legal-encyclopedia/how-much-does-social-security-disability-lawyer-cost.html

Yes he has 10+ quarters. But, his early (62) SS payment is only $850-ish/mo.

 

[Huston55]

The BIL has a crushed hand which likely means he doesn't qualify for SS disability.. remember it's not being able to work at all not just not being able to do the job you were disabled from. IMO not worth expending the time and effort on. He'd be better served working on the VA end.

Agreed

 

[Retired Expat]

Sorry for your loss. Don’t forget to do a search for unclaimed property for every state your sister ever lived in. Amazing what may pop up. Probably check under your BIL name as well

 

[zippy2020]

You are very kind to be helping your BIL handle this. I'm sure it's overwhelming if he were trying to do it himself. Always helps to have someone reliable and 'neutral' to assist when faced with a ton of new data to process!

I would strongly suggest when/if you find an FA for your BIL, that you not only attend the first couple of meetings with him, but also make sure that he sees, talks, or Zooms with his FA on an annual basis. An FA needs to know what's going on with a client in order to be of maximum assistance.

You want to be proactive when using an FA. As an example, pre-pandemic we were seriously considering selling our SFH and looking into senior facility living. Since some require a fair amount of up-front payment, we talked with our FA during a regular annual mtg about the idea.

He worked out a rough total of what he could liquidate quickly, should we need to move fast (good facilities almost always have waitlists). We ended up not going through with the move, but it was reassuring to have a general # to have on hand while we were researching.

Emphasize to your BIL that an FA should be considered a partner in his financial stability. Any major event should be communicated to an FA - in the industry we listed them as:
- Death (yours, for example; should you pre-decease him)
- Change of Health
- Change of Job/Income

The final three probably don't apply to him:
- Marriage
- Divorce
- Children

Best of luck to you and your BIL as you two work your way through this.

 

[imnontrad]

A volunteer with the fb group "Social Security Intelligence" educating people about their SS benefits.

For Social Security - if his SSDI amount is less than her SS eligibility, he should wait until the Full Retirement Age (age 66 and some months) to file for the "Surviving Souse" benefit. This is so that SS benefit will not be reduced for filing early. The FRA for the "surviving souse" benefit is actually a few months earlier than his own FRA.

Is there any family member that can help him learn how to make and follow a budget? Can as many of the bills as possible be put on auto pay?
Is there a city Senior Center where they may have a widow support group, a hot lunch and classes to help him adjust?

 

[target2019]

I've been reading Bogleheads and found a comparison of VWINX -vs- (60% VSIGX + 40% VTSAX). Wow! I didn't realize how much income VWINX produces; $10-$25k/yr -vs- ~$5K/yr for the 60/40 mix [on a $200k investment]. That is making me reconsider holding VWINX in his taxable account, despite no state income tax.

Thoughts?

I would investigate that result for myself. Start with the fund description for VWINX. This is from Yahoo.

Fund Summary
The fund invests approximately 60% to 65% of its assets in investment-grade fixed income securities, including corporate, U.S. Treasury, and government agency bonds, as well as mortgage-backed securities. The remaining 35% to 40% of fund assets are invested in common stocks of companies that have a history of above-average dividends or expectations of increasing dividends.

I would look at the actual distributions of VWINX during troubled times especially. And of course compare this to the VTSAX/VSGIX 35/65 mix.

I'd also want to consider this in the light of all finances and income. You'd want to make absolutely certain you have very good projected tax estimates. The bottom line is what's important to B-I-L - how much does he get to spend? And does this change maximum income requirements in other areas I don't know about. I don't profess to understand everything, but I'm very cautious about overlooking certain items when giving advice or direction.

 

[Nords]

It looks like you're getting good advice, @Huston55.

- $TBD VA disability (he's currently applying, is a combat Vet and will likely get some amount of VA Service Connected Disability pay.)

The only comments I'd add here would be to use a Veteran Service Officer for the filing & processing of the claim. You can find this (free) assistance from local chapters of the VFW, DAV, American Legion, and even MOAA. (No membership in their organizations is required.) There may also be a VSO office from one of these organizations near a VA clinic.

Yes there are presumptive conditions from DESERT SHIELD/STORM. However use the VSO and get it right on the first filing.

The quality of VA clinics is unevenly distributed. He should register with his local clinic (it's how the clinic gets their share of federal funds) but he'll also want to chat with other vets about their services for whatever type of care he may be seeking. Don't quit the ACA or other coverage until you're sure you're happy with the VA.

 

[ivinsfan]

Nords our county pays a VSO with a stand alone office, my DH took his DD14 along and the lady filed his paperwork for VA and a hearing claim in real time.



I want to keep bumping my comment if you are under 65 you cannot have ACA subsidy for HC and VA care at the same time. I know posters don't always read an entire thread.

 

[Huston55]

BACKGROUND: My sister recently died and I'm trying to help my BIL arrange his affairs (finances, health care, etc.).

SITUATION: My BIL is very unsophisticated financially (My sister managed their finances) and has done virtually none of the things he/they should have (will, solid financial/investment plan, etc.) and, many of the things they should not have (bought annuities, hopped in/out of investments, etc.). Fortunately, they were decent savers.

DETAILS:
- BIL is 60 yo, physically disabled (so unable to work), very financially risk averse and has a 28 yo son who's employed and (mostly) on his own

- ~$400-$600k invested/investable assets, depending on life insurance payouts (see details below)

- $80k (cash)

- $336K (tax deferred accounts)
-- $60k (sister's 403b/401a)
-- $240k (IRA currently in Allstate/Equitable indexed variable deferred annuity which is out of the surrender period)
-- $30k (IRA IRA currently in Allstate/Equitable indexed variable deferred annuity which is out of the surrender period
-- $6K (IRA in MMF)

- ~$200k (estimated life insurance payouts)

- ~$25k/yr SS (on my sister's account) beginning @ 67yo in 2029

- $TBD VA disability (he's currently applying, is a combat Vet and will likely get some amount of VA Service Connected Disability pay.)

- Expenses (still trying to get a more accurate estimate): $30-$40k/yr

GOING FORWARD: I want to help him through this period to get him on a firm footing and am willing to periodically give advice after that but, I prefer for him have a trusted financial advisor in the long term. My initial thoughts on a plan forward are below but, the situation is fluid (as he seems to find new files, accounts and details as we go). I'd very much like to hear E-R.org community suggestions, cautions, etc. The more specific, the better.

1. Use the $80 cash in the short term (find decent MMF and/or CDs for much of it)
2. Put the $200k taxable (from life insurance) into 30/70 AA using low/no cost MFs or ETFs
3. Put the tax deferred accounts into a single fund for simplicity (Wellesley or Target fund like VTTVX

UPDATE:

BIL has reviewed 2021 expenses and determined that he needs ~$2,500/mo. My sense is that this is a decent estimate.

I’ve run Mike Piper’s Open SS tool and determined that Option 1 below is optimal by a small margin.

Option 1: BIL waits until age 62 to file his own SS; then takes spousal SS @ age 66 yrs & 2 mos.

Option 2: BIL takes surviving spousal SS now @ age 60. This option pays ~$2,000/mo.

BIL seems very anxious about spending $$$ while waiting until age 66 to claim SS and his state of mind is important, especially regarding behavior during the next downturn. Option 2 provides ~95% of the benefit of Option 1. We can easily generate the remaining $500/mo from low risk investments of the taxable $280k ($80k cash + $200k insurance). So, I will probably suggest to him that he take Option 2.

Still working on the VA front (disability claim & VA health care). Also talking to two FAs.

Thx again for all the feedback. It’s very helpful.

UPDATE #2:

- BIL's assets ($500k +/- investable) + ($500k house/land) are in the range from the OP, as are his monthly expense if ~$2,500/mo

- He took survivors SS @ 60yo and is getting ~$2,000/mo

- I was able to guide him away from the insurance company (which will remain unnamed) who held his investments and wanted to put him in variable annuity products. I connected him with a known and trusted FA @ Fidelity. He will pay a % of AUM but, will be in good hands, and I will not be 'directly' involved. Most of his accounts are now rolled over to Fidelity.

- He is now in the VA health care system, which seems like it will be adequate until he reaches 65 and qualifies for Medicare.

- His VA disability claim is in process, and we're hoping he gets a rating early in 2023. I expect this to generate a modest amount of additional monthly income for him.

- INPUT REQUESTED: We (BIL, me & Fidelity FA) are having a difficult time getting clear info and responses from my sister's pension manager (Empower/Prudential). We finally got the Summary Plan Description, which lays out the pension options. He must take a Lump Sum as a survivor. When I do the calculation (using longevity tables [life expectancy ~81] and a typical annuity discount rate [4-7%/yr] to calculate the NPV of his lump sum), I get low six figures compared to the $18k they say he gets. I'm going to have the Fidelity FA check my math but, I'd like input on what our next steps should be. I've considered the following:

1. Ask the pension manager to provide their survivor's pension lump sum calculation.
2. Engage a lawyer (BIL already needs an estate lawyer for a couple other items) to help.

Your input welcome.

 

[imnontrad]

> - He took survivors SS @ 60yo and is getting ~$2,000/mo

I am assuming this to mean that his own SS benefit is higher. If so, the longer he waits to transition to his own benefit. the higher amount this will be. But if his disability is life limiting, waiting until 70 for the maximum amount may not be ideal.

He can use the VA system even after 65. But the downfall is that if he needs to go outside of the VA system for care and has never signed up for Medicare, he will have a huge bill. So he could continue care at the VA (especially if he has established doctors that he likes) and pay the Medicare bill/supplements as a backup in case he has to go elsewhere.

Also, if later in life, he is struggling financially and needs more assistance, the VA has an "Aid and Attendance" benefit that he may become eligible for.

I do not know anything about Empower but my guess is that the lump sum benefit is based on the life expectancy of a man born the same year as his late wife, not his birth year. When you have that lump sum amount, you might want to contact an independent insurance agent and ask what that lump sum would get him if he bought an immediate annuity. Also, find out if there is any inflation provision on that annuity.

There is no legal definition of a FA. That title can literally be given to a recent HS grad who walked in off of the street. That person also may have had zero training plus, I think you will find that the FA will recommend only Fidelity funds - not a fiduciary. And that FA will only look at the investments, not the overall financial picture and circumstances. I think finding a fee only CFP who is a fiduciary at all times may be a lot better option.

Also look to see if the state/county/city has any tax breaks for seniors, veterans and disabled residents that he may qualify for (either now or in the future) that will help him stretch his budget each year.

 

[OldShooter]

... I do not know anything about Empower but ask the pension manager for a list of all annual fees for the account - including all hidden fees. My guess is that they are not insignificant. ...

+1 Better than asking, get a pdf of the full plan document and text search for words like "fee" and "expense."

...There is no legal definition of a FA. That title can literally be given to a recent HS grad who walked in off of the street. That person also may have had zero training plus, I think you will find that the FA will recommend only Fidelity funds - not a fiduciary. And that FA will only look at the investments, not the overall financial picture and circumstances. I think finding a fee only CFP who is a fiduciary at all times may be a lot better option. ...

Yes. What you get at a brokerage is (at best) an "investment advisor," not a "financial advisor." Regardless of what the business card says.

... Also look to see if the state/county/city has any tax breaks for seniors, veterans and disabled residents that he may qualify for (either now or in the future) that will help him stretch his budget each year.

Yes. See my post #6 -- this is the link: https://aging.ca.gov/Programs_and_Services/

 

[Huston55]

> - He took survivors SS @ 60yo and is getting ~$2,000/mo

I am assuming this to mean that his own SS benefit is higher. If so, the longer he waits to transition to his own benefit. the higher amount this will be. But if his disability is life limiting, waiting until 70 for the maximum amount may not be ideal.

He can use the VA system even after 65. But the downfall is that if he needs to go outside of the VA system for care and has never signed up for Medicare, he will have a huge bill. So he could continue care at the VA (especially if he has established doctors that he likes) and pay the Medicare bill/supplements as a backup in case he has to go elsewhere.

Also, if later in life, he is struggling financially and needs more assistance, the VA has an "Aid and Attendance" benefit that he may become eligible for.

I do not know anything about Empower but my guess is that the lump sum benefit is based on the life expectancy of a man born the same year as his late wife, not his birth year. When you have that lump sum amount, you might want to contact an independent insurance agent and ask what that lump sum would get him if he bought an immediate annuity. Also, find out if there is any inflation provision on that annuity.

There is no legal definition of a FA. That title can literally be given to a recent HS grad who walked in off of the street. That person also may have had zero training plus, I think you will find that the FA will recommend only Fidelity funds - not a fiduciary. And that FA will only look at the investments, not the overall financial picture and circumstances. I think finding a fee only CFP who is a fiduciary at all times may be a lot better option.

Also look to see if the state/county/city has any tax breaks for seniors, veterans and disabled residents that he may qualify for (either now or in the future) that will help him stretch his budget each year.

+1 Better than asking, get a pdf of the full plan document and text search for words like "fee" and "expense."

Yes. What you get at a brokerage is (at best) an "investment advisor," not a "financial advisor." Regardless of what the business card says.

Yes. See my post #6 -- this is the link: https://aging.ca.gov/Programs_and_Services/

- BIL is collecting survivors SS benefit on his deceased spouse's SS because she was the high earner (See earlier posts)

- Good point about enrolling for Medicare when it's time. That's 5 yrs from now so, a back burner item.

- BIL will be means tested out of Aid & Attendance; doesn't take much for that to be the case.

- I understand all the comments regarding "fiduciary" FAs and, in almost all cases, I agree with them. This is not one of those cases. When I say "known & trusted FA" I mean an advisor at Fidelity who I know personally and have worked with (I manage my own portfolio but, he's my assigned Private Client Group advisor who I talk to regularly and trust completely). As discussed in previous posts, my BIL will need almost constant hand holding; for both investment and behavior management. I know he will get this through the Fidelity FA relationship. I'm not certain, and frankly not able due to our 2,000 mile separation, he'll get this through an hourly fiduciary FA that I'd have to help him select, then hope we've made a good choice that my BIL will continue. The fact is that with retirees like my BIL, the ~1% AUM fee will be more than paid for by FA guidance that prevents poor financial behavior.

- Good suggestions on checking out local programs for folks in my BIL's circumstances.

 

[pb4uski]

...INPUT REQUESTED: We (BIL, me & Fidelity FA) are having a difficult time getting clear info and responses from my sister's pension manager (Empower/Prudential). We finally got the Summary Plan Description, which lays out the pension options. He must take a Lump Sum as a survivor. When I do the calculation (using longevity tables [life expectancy ~81] and a typical annuity discount rate [4-7%/yr] to calculate the NPV of his lump sum), I get low six figures compared to the $18k they say he gets. I'm going to have the Fidelity FA check my math but, I'd like input on what our next steps should be. I've considered the following:

1. Ask the pension manager to provide their survivor's pension lump sum calculation.
2. Engage a lawyer (BIL already needs an estate lawyer for a couple other items) to help.

Your input welcome.

Was your sister already collecting on her pension? Was she still working for the employer? Does the SPD provide any details on how the lump sum is calculated?

I'm not sure if a lump sum is really his only option. I read a couple articles and they both refer to pension payments.

https://www.pensionrights.org/resource/understanding-survivor-benefits-in-private-retirement-plans/

... The survivor benefit is a portion of this monthly amount, and is paid to the surviving spouse every month for the rest of his or her life.

Federal law also states that the surviving spouse of a deceased plan participant must receive at least half of what the participant was receiving every month.

 

[Huston55]

Thx for the link and the suggestions PB.

My sister was still working and not yet collecting. The SPD does give a good example of surviving spouse benefit calculation. Her pension exercised the 50% surviving spouse benefit reduction in 2020 due to being underfunded. Even with all that, my calculation using their example results in the low 6-figure lump sum amount I described versus the $18k amount they told my BIL.

 

[SecondCor521]

From a tax point of view, a few minor things to know:

1. Your BIL will most likely be able to file MFJ this year, which is generally speaking the most advantageous filing status.

2. For any taxable investments they had, he should work with their broker to get a step up in basis as of your sister's date of death. This will either be a step up of half of the assets or all of the assets, depending on whether or not they lived in a community property state. This generally will reduce his future capital gains taxes on those stepped up assets.

 

[Huston55]

BIL UPDATE #3

Well, it took about a year to sort things out but, my BIL is now in a good place regarding finances, health care and trusted professional advice. He also seems to be doing better personally and psychologically, which makes me happy. I was able to spend some time with him last Fall and speak with him monthly, and he seems noticeably better now. A summary of his current status is below. Thanks to all those here on E-R.org for your helpful input.

ASSETS/LIABILITIES:

- $500+k Investment portfolio; extracted his accounts from the self-serving insurance company asset manager;
- Established a taxable brokerage account and savings/checking account for insurance and other non qualified funds.
- Both qualified & non qualified accounts are now located at & managed by Fidelity for % of AUM, which is a good arrangement for him
- $500-$600k primary residence properly titled
- No current liabilities
- Net Worth: ~$1.2M

EXPENSES:

- $2,500/mo confirmed

GUARANTEED INCOME:

- SS (surviving spouse): $2,000/mo being paid
- $1,933/mo VA Disability (received 80% rating): $1,933/mo being paid
- Engaged an attorney to evaluate the Surviving Spouse Pension; received a 5-figure lump sum payout
- BIL is working with local SS office to determine if he also qualifies for SSDI
- Current Total Income: $3,933/mo

HEALTH CARE:

- Enrolled in VA Health Care system and receiving good care, with a little bureaucracy thrown in.
- Approval of SSDI would qualify him for Medicare
- Has gone to a bit of therapy.

 

[pacergal]

Great update.
You were a wonderful help in guiding BiL through this, Kuddos to you!

 

[LateToFIRE]

Good point but, his disability is a crushed hand, which shouldn't shorten his life expectancy. However, perhaps I should have a "family" (father, brothers) longevity discussion with him.

Sorry for your loss.

Physical disability like that should qualify your BIL for social security disability, which might help bridge him to SS retirement age.