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Old 11-17-2020, 09:18 AM   #61
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Originally Posted by Rianne View Post
We have 2 years to decide on pension. I find these numbers confusing:

75% Survivor Annuity - $2763 monthly, if one dies $2072

100% Survivor Annuity - $2626 monthly, one dies $2626

50% Survivor Annuity - $2926 both live, one dies $1457 - $1469 difference for survivor.

This seems like a no brainer. Why would someone work their whole life then chance losing all of the pension b/c of early accidental or health death? This show over $1000/month survivor benefit loss between 100% an 50%.
You didn't list 0% Survivor. Some people choose this and then buy a life insurance policy to cover the pension loss for less than the cut in pension for the survivor annuity.
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Old 11-17-2020, 09:27 AM   #62
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Originally Posted by skipro33 View Post
You didn't list 0% Survivor. Some people choose this and then buy a life insurance policy to cover the pension loss for less than the cut in pension for the survivor annuity.
Right, 0% survivor is $3277/month. But a life insurance policy at our age? That is interesting, we need to look into that strategy. I have no idea how much a life insurance policy would cost at 62.
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Old 11-17-2020, 09:44 AM   #63
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Right, 0% survivor is $3277/month. But a life insurance policy at our age? That is interesting, we need to look into that strategy. I have no idea how much a life insurance policy would cost at 62.
Be sure you price a TERM policy. Not whole life.

The difference between 0% and 100% is $651 a month. It would take a policy of $110,000 paid out and invested at 4% to cover $651 a month for 20 years, or, if age 65, to age 85.

A policy for $125,000 under those conditions would cost $137 a month on average and take you out to 25 years. A net gain of $514 a month.

Calculations for the cost of the term policy were gleaned from this site;
https://www.nerdwallet.com/blog/insu...surance-rates/

****EDIT****.
You mentioned you were 62. At age 62, a policy for 25 years for $125,000 would cost $162 a month.
You could buy the policy for 10 years at $53 a month, then at age 72 buy another for 10 years at $154.
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Old 11-17-2020, 10:17 AM   #64
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One thing that I donít recall being mentioned is the cost of the survivor benefit can be higher if the surviving spouse is much younger (e.g. > 5 yrs). That couldíve contributed to my cousins situation.
The cost possibly was higher, because the value is higher having a pension that lasts longer.

Unfortunately, people often only see the $$$ signs, and miss out on the value or true cost of things.
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Old 11-17-2020, 10:22 AM   #65
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I believe that it is a function of a couples financial situation, their health situation, and what life insurance is in force post retirement.

I do not think that this is a one size fits all situation. Hence the options...often including commuted value.
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Old 11-17-2020, 10:28 AM   #66
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Originally Posted by skipro33 View Post
Be sure you price a TERM policy. Not whole life.

The difference between 0% and 100% is $651 a month. It would take a policy of $110,000 paid out and invested at 4% to cover $651 a month for 20 years, or, if age 65, to age 85.

A policy for $125,000 under those conditions would cost $137 a month on average and take you out to 25 years. A net gain of $514 a month.

Calculations for the cost of the term policy were gleaned from this site;
https://www.nerdwallet.com/blog/insu...surance-rates/

****EDIT****.
You mentioned you were 62. At age 62, a policy for 25 years for $125,000 would cost $162 a month.
You could buy the policy for 10 years at $53 a month, then at age 72 buy another for 10 years at $154.
Which sounds great, unless the life insurance company decides not to pay...

It happened to my friend's Mother, when her husband dropped dead of a heart attack.
He had the policy for approximately 25 yrs, and it was always paid..

Some insurance companies (quite a few) do sometimes refuse to pay out, as it makes the numbers look good, and gets bonuses to the insurance staff. No way to know if your insurance company turns out to be slimely in 10 or 20 yrs.

I worked with an ex- life insurance employee who detailed to me some really terrible stories about denying claims, so employees got bonuses. One stood out as they denied/delayed it for so many years the spouse died !
She quit working there as it was too hard on her.
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Old 11-17-2020, 10:29 AM   #67
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I believe that it is a function of a couples financial situation, their health situation, and what life insurance is in force post retirement.

I do not think that this is a one size fits all situation. Hence the options...often including commuted value.
I agree totally. DW has a modest pension that we (I especially) decided to take with 0% death benefit for me. I prefer to have more money now while we are a couple. I will have much less need for money if she dies first. Although we are of equal age, I am statistically more likely to die first and her larger pension will continue. I have no pension so we did not need to make that choice.
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Old 11-17-2020, 12:41 PM   #68
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As already stated, a lot depends on a couple's other finances, and the relative size of the pension. It is a very similar situation to decisions made when annuitizing a whole life insurance policy. In our case we (yes, we) decided on single life with no survivor benefits. The gross amount was less than 3% of our SWR. We decided to take the extra now and BTD ) with an extra dinner each month while we can both enjoy it. OK, single life was only about $70 per month difference or so. But it goes to show that the answer is not necessarily a cut a dry answer.

In the OP's case, that couple unfortunately made a horrific choice. At least she agreed to it, unlike some older couples who were not required by law to share in the decision. It doesn't make the situation any easier. It does point out that both people in a marriage should be somewhat knowledgeable in finances and not simply go along with their spouse's choices. Without that basic knowledge, I fear her future will be worse off than it immediately appears to be. He did a disservice to her by not teaching her some of those basics. Knowledge is power, as they say.
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Old 11-17-2020, 12:58 PM   #69
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My input is rarely well written. I had a secretary for that (juskiddin). I used to do paperwork needed in businesses myself, I was the only one billing & interpreting my own gibberish!

As a example:
I had a best friend from days gone by since we were both 12yrs old.
His marriages left him near destitute from a 3.8Mil apex position he'd attained before wife #1s settlement.

I now call it as I see it, like every politician is a crook! D/R/I all of them!
I'm usually correct, but sometimes wrong also.

Should females be considered in the front lines in the Army, Navy, AirForce, Marines, Police, Fire, EMTs etc....not in my world. Males incur injuries because their female co-workers that were there because of employment equality nonsense issues when the males scoietal conditioning toward females was the governing factor in the injury.(supportingthem)

I reviewed UPS delivery service data. Females retired disabled 4:1.
However laws dictate they be hired for delivery routes.
I operated a number of income operations yrs back. One was a stevadoring outfit, not one female considered applying.
Yes, there are outliers as I'm sure all recognize.
I digress....

Heres one: Consider an Alpha Male in the Gorilla hierarchy.
All the females gravitate to his position of security, shelter, reproduction, affection & nourishment.
IIRC-Humans are what, 99.?% the same base DNA as certain primates.
AFAIK- I might be incorrect. I did not google it

I was not berating anyone.
This post took me close to 3hrs
We've all deficits and strong points.

No doubt your correct Gumby, all I recalled was something "?" Goebbels.

The public would be amazed how China, Greek, Rome, Spain, Britain, & USAs histories seem similar. Not like I'd learned in schools 1-8.
I'd also heard Henry Ford said: If the American public knew about the USAs currency providers (FED) actions they'd ......... fill in the blank or google it I forget the exact terms.

This pension thread got me thinking of another pal whom did right for himself. The current female he was living with thought she should benefit from his 32yrs of .gov service and select that option. He disagreed.
I agreed with him. He got her a pensioned courthouse position w/in 30days. / shrug /

This is a great site, my hats of to you & crew.
I hope alls well.
Good luck & Best wishes......

This has been close to 4 hrs modifying....I hope you get my drift.

I'm still confused that you somehow think this post is an improvement over your first post on this thread... I think you wasted 4 hours of your life ..
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Old 11-17-2020, 01:00 PM   #70
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I guess if you want to retire before 58 with limited resources you make some choices, not necessarily good choices but there it is.

You mention they were not savers, so I guess they are both responsible in the end.


However although you say we should "counsel" friends who might be in that position, I quit going there a long time ago. Those discussions fit squarely in the no good deed goes unpunished category.
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Old 11-17-2020, 01:19 PM   #71
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I would not 'counsel' friends in a similar position. I would however encourage them to spend a small amount of money and get the advice of a reputable financial consultant.

There have been a few times in our lives when we had to make a decision on a personal issue-legal, tax, accounting, etc. We chose to pay for the appropriate professional advice rather that take a stab in the dark or worse seek out the advice of friends who may or may not be knowledgeable or current. Or even know the right questions to ask.
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Old 11-17-2020, 01:52 PM   #72
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I would not 'counsel' friends in a similar position. I would however encourage them to spend a small amount of money and get the advice of a reputable financial consultant.

There have been a few times in our lives when we had to make a decision on a personal issue-legal, tax, accounting, etc. We chose to pay for the appropriate professional advice rather that take a stab in the dark or worse seek out the advice of friends who may or may not be knowledgeable or current. Or even know the right questions to ask.
What!!! you know you need to come directly to this forum to get answers to those questions.
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Old 11-17-2020, 02:44 PM   #73
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It does point out that both people in a marriage should be somewhat knowledgeable in finances and not simply go along with their spouse's choices. Knowledge is power, as they say.
^This X1000. Never depend on anyone but yourself. DW and I have been together almost 30, married almost 28 and we still have seperate (but joint) checking, saving and MM accounts. Fully transparent. She always says "I'm not your MWR" (that's entertainment committee for you civilian types). We are also not each other's bankers, etc... I have known so many people (typically ladies) who got screwed over. Ridiculous. Never NEED a partner. Want one and have one but never NEED one.
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Old 11-17-2020, 03:12 PM   #74
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I'm still confused that you somehow think this post is an improvement over your first post on this thread... I think you wasted 4 hours of your life ..
I think your correct ivinsfan!
After 3hrs attempting to use the correct grammar & terminologies I was still editing, and at 4hrs I quit!

In staying tangentially OT a friend had this on his Estate Atty Blog today.

https://news.artnet.com/art-world/an...-owner-1916453
(A wealthy Art Dealer leaves his estate to the nearby Deli folk that helped him for years in his waning days on this planet).

Strange things happen to assets often once one passes unless the direction is set in stone. TOD/PODs asset designations over rule anything a multi-noteraized will' says, in every state in the USA, even if the wills less than 6 mo. old. Thats my understanding from recent experience.

Although I can understand the Art Dealer re-directing his assets to those near and dear to his well being, care & end of lifes wishes that helped him in his last years alive.

^^^Bigdawg above makes great points!

Good luck & Best wishes.......
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Old 11-18-2020, 09:01 AM   #75
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What the heck just happened? I was reading about pensions then all hell broke loose.
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Old 11-18-2020, 10:02 AM   #76
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My husband and I both have pensions and took the 100% survivor benefits. He is 5 years younger than me but we felt the reduction was necessary.
smart move IMO
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Old 11-18-2020, 10:18 AM   #77
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What the heck just happened? I was reading about pensions then all hell broke loose.
Just a typical day at the office..
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Old 11-18-2020, 01:16 PM   #78
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Back on the pension and survivor concept, I would reiterate the point that everyone's situation is different. And you need to look at the entire financial picture.

In our case... DW is several years older, has 2 small pensions and SS (reduced by WEP). One pension is from teaching at a private religious school so is not covered by ERISA/PBGC. In other words, it could go away! The other pension is a state retirement system that had a COLA (first was reduced, then went away with decision to reevaluate after 5 years, not looking likely). And, state pension is where we get health care.

She is fully retired and started all. What did we do?
State pension is 100% survivor since the reduction was about 7-8%, I forget. And I rely on the ability to get my health insurance there (she does get a small supplement to hers).
Private pension, which could theoretically reduce or go away if they run low, offered something like 30% reduction for 100% survivorship! Huge difference! We took 0% survivor on that.
Finally, we delayed her SS to age 70 since it was on the small side and we could do Roth conversions of her modest IRA money, and would give me survivor benefits if needed until I draw mine.

I will have a small state pension earned late in life, a bigger SS (only small WEP as I have 27 years in). During times affected by GPO, reduces all SS to zero for either of us. My small pension has a HUGE early draw reduction, so I will delay it until full age/amount. Also wait until then to decide what, if any, survivor amount. Still years away and will depend on where things stand at that time, both money and our health status. Most of my retirement money was pretax, 401k, 403b, 457 dollars.

Probably hard to understand the details here, but my point is that we have (and will have) multiple income streams, none of which sound that big but add up to enough to be of interest. Add in keeping taxes down long term with Roth conversions, and being efficient in drawing down those pretax $, and it was a rather complicated big picture. I spent quite a bit of time going through the options to settle on a strategy that would ensure we'd be fine if we both get to 100, or either of us is fine if one of us got hit by a bus tomorrow.

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Old 11-18-2020, 02:49 PM   #79
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What the heck just happened? I was reading about pensions then all hell broke loose.
Rianne, it's the butterfly's wings effect of Second Chance burning down that cold winter night when the temp was below zero. The next day, both cities were out there with front end loaders trying to peel up the glaciers blocking all lanes of Green Street. The students in the school of CBA wailed "where will we drink now, generations of our family drank there". Alas, no one can predict what subtle nudges will do to the world of chaos. I would like to point out, however, that the insertion of a bit of chaos into this thread did not involve *****, "he who's name shall not be mentioned", nor did it invoke kayaks. I think the fabric has healed over now, so back to Pension disbursement choices, and their effects on Spouses
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Old 11-18-2020, 11:16 PM   #80
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Back on topic... I had a small pension that I could take when I reached 55. I figured, and DW agreed with me, that it was so small, that it wasn't worth cutting it further with any survivor option. When I started it, it would just pay our real estate tax bill. With inflation eating away at it, it falls well short now.

At megacorp, I had a pension that I could take in the not-so-near future with no reduction when I reached the rule of whatever, summation of years of service + age. In the crash of an industry, us 45 and older folks who had more than 10 years in were offered a package, that would add to our age (NOT our years of service, which is where the real $$ are), in effect "giving" us an unreduced pension. A Lump Sum only. BUT... since that target computational point was out at age 55, if you were less than 55 (I was!), the lump-sum amount was stepped back down from the "future" to the then-present by the GATT interest rate at that time. That interest rate was applied to ALL the years needed to step back down from age 55 to then-age. GATT was ~5.48% IIRC. So took a real hit there. I do not remember any paperwork that DW needed to sign agreeing that it was a lump sum, as that was the only choice. I rolled it into my TIRA, along with my 401k, and they have done well there.

So it seems that the forced lump-sum either ignored the spouse-must-agree-rule on survivorship choice, or lump-sums do not trigger it.
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