Seeking Advice to Help Recently Widowed BIL

[Huston55]

A word about VA disability. Payouts start at around 150 bucks a month and can go higher. It's not a gravy train. At 60 your BIL is too young to be a Nam vet. Why does this matter? Because of Agent Orange many health issues are considered presumptive for Nam vets, the claims are rubber stamps. This isn't true for other service times.

On a practical note what does your BIL do for health care? Was he on your DS work policy, and ACA plan or the VA. Helping him figure out health costs would be more valuable then worrying about an FA at this point. For example if you are enrolled in the VA system you cannot claim an ACA subsidy. Health is a big expense for older Americans.

His VA disability will also come into play in his finances. How far along is he in this process?
Is he also collecting SSDA payments or applied?

Blessings to you as you assist your BIL in this.

BIL has formally submitted is intent to file for VA disability, which sets his effective pay date when he gets a disability ratting. I say "when" because, he's an Iraq combat vet and will qualify for presumptive conditions related to digestive & likely respiratory issues.

Regarding SSDI, I doubt he'll qualify. But, it's worth checking with the SS office. Thx for the suggestion.

 

[ivinsfan]

BIL has formally submitted is intent to file for VA disability, which sets his effective pay date when he gets a disability ratting. I say "when" because, he's an Iraq combat vet and will qualify for presumptive conditions related to digestive & likely respiratory issues.

Regarding SSDI, I doubt he'll qualify. But, it's worth checking with the SS office. Thx for the suggestion.

This is good for your BIL I think after Vietnam they are realizing that conditions military were subjected to in combat can take a long time to have a negative impact..this is a good change IMO.



It's a good thing when these subjects come up in thread not specific to VA. I'm pretty sure there are vets out there that don't realize some VA help and money could be available to them.

 

[N02L84ER]

If he qualifies for SS on his own record, then OpenSocialSecurity will probably suggest one of the 2 following options based on who has the greater benefit and the ages of the spouses.
He files for his own benefits at 62 and her survivor benefits at full retirement age. or

He files for survivor benefits now and his own benefits at age 70.

 

[Huston55]

Has your BIL tried looking for any work at all? I'm sorry he was injured yet disabled is probably not the word to describe him. For example Home Depot is very proactive about hiring vet with physical issues.


If your BIL is going live 100% on assets for 7 years that really cuts into his nest egg at the fairly young age of 67.


A word about VA disability. Payouts start at around 150 bucks a month and can go higher. It's not a gravy train. At 60 your BIL is too young to be a Nam vet. Why does this matter? Because of Agent Orange many health issues are considered presumptive for Nam vets, the claims are rubber stamps. This isn't true for other service times.



On a practical note what does your BIL do for health care? Was he on your DS work policy, and ACA plan or the VA. Helping him figure out health costs would be more valuable then worrying about an FA at this point. For example if you are enrolled in the VA system you cannot claim an ACA subsidy. Health is a big expense for older Americans.


To be blunt if he doesn't take SS and lives on the nest egg for 7 years at say 35K he's taken almost a quarter million dollars from his nest egg and at 67 might be light on money.

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.

 

[Huston55]

If he qualifies for SS on his own record, then OpenSocialSecurity will probably suggest one of the 2 following options based on who has the greater benefit and the ages of the spouses.
He files for his own benefits at 62 and her survivor benefits at full retirement age. or

He files for survivor benefits now and his own benefits at age 70.

I have to admit not knowing the details of "file & suspend" since the law changed recently but, I thought that folks the age of my BIL couldn't do that (collect his SS early @ 62, then switch to his spouse's @ FRA or later). Can someone clarify this?

 

[N02L84ER]

Survivor benefit rules are not the same as spousal benefit rules.

 

[ivinsfan]

Survivor benefit rules are not the same as spousal benefit rules.

That's right and one reason I have mentioned this several times ...I don't think FAs are really qualified to council someone on this subject. too many nuances involved. Even those of us who consider ourselves pretty savvy has found out we don't always know Jack about this.



Your BIL grieving working on VA matters not financially savvy is not liable to understand these rules unless you help him.. this might be one of the more important issues.

 

[ivinsfan]

Huston55 if he wants VA care as a combat vet it's possible he can join the system right now. Buttt..as I mentioned once he does that he gives up any chances of ACA tax credits so not a decision to be made lightly.



You said to dig deep so if he keeps his income lowish uses cash to live on for 2 to 5 years he possibly could get virtually free ACA coverage while letting SS grow.

 

[Huston55]

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 1.

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.

 

[pb4uski]

...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

I like the idea of consolidating the tax-deferred accounts... hopefully into a single tIRA. Then build a CD or UST or TIPs ladder to provide for his gap from now until he is 66/2. So at $35k a year that would be $215k... about 1/3 of his stash but will provide longevity insurance should he get lucky and live long.

Bear tax efficiency in mind, putting fixed income in the tIRA and equities in taxable accounts where qualified dividends and LTCG will get preferential rates and likely not be subject to tax at all.

For the $80k of cash you could put a year of spending and an emergency fund provision in an online savings account and the rest in CDs.

You also might also consider some i-bonds in his taxable accounts since he is risk-averse.

 

[pb4uski]

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 1.

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.

Did you mean that you will suggest that he take Option 2?

 

[Huston55]

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 [-]1[/-] 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.

Did you mean that you will suggest that he take Option 2?

Thx PB. Yes, I did mean I will likely suggest he take Option 2.

 

[Huston55]

I like the idea of consolidating the tax-deferred accounts... hopefully into a single tIRA. Then build a CD or UST or TIPs ladder to provide for his gap from now until he is 66/2. So at $35k a year that would be $215k... about 1/3 of his stash but will provide longevity insurance should he get lucky and live long.

Bear tax efficiency in mind, putting fixed income in the tIRA and equities in taxable accounts where qualified dividends and LTCG will get preferential rates and likely not be subject to tax at all.

For the $80k of cash you could put a year of spending and an emergency fund provision in an online savings account and the rest in CDs.

You also might also consider some i-bonds in his taxable accounts since he is risk-averse.

I should have included in the OP that my BIL is in a "no state income tax" state. And, as you can see from his expenses, he will almost certainly remain in the 12% tax bracket. So, a single fund in his taxable account wouldn't cause a big tax hit, and might be worth a small tax bite for simplicity. However, if his FA (when we have that set) recommends a 30/70-ish AA in two low cost index funds/ETFs, and the FA will be there to help rebalance and guide distributions for income, I'm all for that.

 

[ivinsfan]

Really, with any VA disability payments option 2 would be just fine. There's a lot to said for getting BIL to a place where he doesn't feel inclined to "mess" with his investment.


It's good you came here with an open mind because now the BIL waiting until he turned FRA seems to be completely off the table.



Do you happen to know how much money your BIL allocated for heath care in that 2500 a month? In my mind that could be the wildcard. If you can find a VSO to help navigate the VA system that might be helpful. In our state a lot of counties have a VSO or you might check his local VFW , DAV , and the like.

 

[oldtimer]

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 1.

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.

Did you mean that you will suggest that he take Option 2?

Thx PB. Yes, I did mean I will likely suggest he take Option 2.

Did you mean survivor SS benefits, not spousal SS benefits?

 

[Huston55]

Did you mean survivor SS benefits, not spousal SS benefits?

Yes I did & thx for clarifying. I need to be more precise in my descriptions.

 

[Huston55]

Do you happen to know how much money your BIL allocated for heath care in that 2500 a month? In my mind that could be the wildcard. If you can find a VSO to help navigate the VA system that might be helpful. In our state a lot of counties have a VSO or you might check his local VFW , DAV , and the like.

No. Still trying to sort that out and ensure that he has "qualified" coverage from the VA. He thinks he does because my BIL is a "that VA woman in Nashville told me I'm in the system" kind of guy. But, I'll believe it when he has the documentation. Agree we need to keep an eye on this.

 

[braumeister]

No. Still trying to sort that out and ensure that he has "qualified" coverage from the VA.

This may be a good place to start:
Eligibility for VA health care

 

[Huston55]

I like the idea of consolidating the tax-deferred accounts... hopefully into a single tIRA. Then build a CD or UST or TIPs ladder to provide for his gap from now until he is 66/2. So at $35k a year that would be $215k... about 1/3 of his stash but will provide longevity insurance should he get lucky and live long.

Bear tax efficiency in mind, putting fixed income in the tIRA and equities in taxable accounts where qualified dividends and LTCG will get preferential rates and likely not be subject to tax at all.

For the $80k of cash you could put a year of spending and an emergency fund provision in an online savings account and the rest in CDs.

You also might also consider some i-bonds in his taxable accounts since he is risk-averse.

I should have included in the OP that my BIL is in a "no state income tax" state. And, as you can see from his expenses, he will almost certainly remain in the 12% tax bracket. So, a single fund in his taxable account wouldn't cause a big tax hit, and might be worth a small tax bite for simplicity. However, if his FA (when we have that set) recommends a 30/70-ish AA in two low cost index funds/ETFs, and the FA will be there to help rebalance and guide distributions for income, I'm all for that.

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?

 

[ivinsfan]

This may be a good place to start:
Eligibility for VA health care

I don't know anywhere that the actually say what priority they are accepting in real time. For instance when my DH was accepted he was a 6...I don't know if they make that public knowledge.



I do know that at 60 with a lower income VA might not be the best option. Depending on location and quality of care in the area he might be best served staying on ACA.



OP does your BIL get a notice of qualified health benefits from the VA at the end of every year. That should be easy enough to verify.

 

[braumeister]

I don't know anywhere that the actually say what priority they are accepting in real time. For instance when my DH was accepted he was a 6...I don't know if they make that public knowledge.

Since you can apply online, I would probably do that. If he's not enrolled they will process it now. One of the sections of the link I posted contains this.

https://www.va.gov/health-care/how-to-apply/

I'm in Group 3 so I've been in the system a long time, but they will send him a letter in the mail when he is enrolled, usually within a week of applying.

There is also a phone hotline he can call to get questions answered, M-F 0800-2000 Eastern time.
877-222-8387

 

[ivinsfan]

Since you can apply online, I would probably do that. If he's not enrolled they will process it now. One of the sections of the link I posted contains this.

https://www.va.gov/health-care/how-to-apply/

I'm in Group 3 so I've been in the system a long time, but they will send him a letter in the mail when he is enrolled, usually within a week of applying.

There is also a phone hotline he can call to get questions answered, M-F 0800-2000 Eastern time.
877-222-8387

I'd try the hotline first until he is 100% positive he wants to enroll. Or look for the VA health care annual form. If/when his service connected is approved he should jump to a 3 at a minimum.

 

[Huston55]

I don't know anywhere that the actually say what priority they are accepting in real time. For instance when my DH was accepted he was a 6...I don't know if they make that public knowledge.



I do know that at 60 with a lower income VA might not be the best option. Depending on location and quality of care in the area he might be best served staying on ACA.



OP does your BIL get a notice of qualified health benefits from the VA at the end of every year. That should be easy enough to verify.[/QUOTE]

Since you can apply online, I would probably do that. If he's not enrolled they will process it now. One of the sections of the link I posted contains this.

https://www.va.gov/health-care/how-to-apply/

I'm in Group 3 so I've been in the system a long time, but they will send him a letter in the mail when he is enrolled, usually within a week of applying.

There is also a phone hotline he can call to get questions answered, M-F 0800-2000 Eastern time.
877-222-8387

BIL is just now applying for VA heath car so, still working on confirming (and getting documentation) that BIL has VA health coverage, and what group.

Brau-I'm also Group 3.

 

[Huston55]

I'd try the hotline first until he is 100% positive he wants to enroll. Or look for the VA health care annual form. If/when his service connected is approved he should jump to a 3 at a minimum.

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.

 

[braumeister]

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.

I'm the same as you, but I make it a point to visit my local VA clinic every year for a checkup. I've found them to be wonderful. Very caring folks and they will do anything for you.

Another point is that long ago I avoided going there because I had Tricare and felt I should let them see those who needed their care more than I did. But one of the docs there told me I had it all wrong. As long as you visit your local facility at least once every two years, you are in their system and that helps their budget. So I've been going in every year since then. Sometimes its just for a chat, but other times I've asked for lab work, and occasionally some specialized service like orthotics.

If I had to rely solely on VA medical care I'd be perfectly happy doing so.

In addition to the local clinics, which are all over, there is also a large VA hospital nearby, and it has a good reputation as well. There are horror stories about VA medical care of course, but the same applies to many other health systems.