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Spousal Pension NOT optional for some
Old 11-14-2020, 02:54 PM   #1
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Spousal Pension NOT optional for some

A casual friend (brother of one of our best friends) passed away yesterday. Unexpected, he fell off a ladder trimming a tree.

He was 58 and a retired labor. It turns out his 51 year old wife, who is on disability, will get nothing from his pension. Seems "they" agreed to take 100% with no survivor benefit. She signed the papers, so there is no recourse. She is cut off immediately.

They were not savers, but the pension, with SS would be enough to live on.

I know there are circumstances that say the discount for survivor benefits is at least debatable (two pensions, large savings, etc.). This was not one of them.

For most here, we know enough to consider the possibilities. But many may have friends (like us) that don't think that far out. If you can, counsel them.
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Old 11-14-2020, 03:34 PM   #2
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Tragic - ESPECIALLY with that big of an age difference.
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Old 11-14-2020, 03:58 PM   #3
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Yes, this is very sad.

Because she was younger, the joint & survivor option would have "cost" him more.

Frequently, a spouse simply signs what is put in front of her. Likely, hubby was not all that financially savvy either and didn't think it through.

The loss of his pension may also result in the loss of any health care afforded to her through him as well.
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Old 11-14-2020, 04:01 PM   #4
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Yikes, how awful! DH and I haven't yet decided about survivor benefits with his pension. I'd be ok without it, but better with it of course. Among other things, we need to figure the tax consequences of him taking 100% vs. less with SB. There might be some incentive there to take the SB route. Got a few years at least to figure it out.
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Old 11-14-2020, 04:04 PM   #5
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Yes, this is very sad.

Because she was younger, the joint & survivor option would have "cost" him more.

Frequently, a spouse simply signs what is put in front of her. Likely, hubby was not all that financially savvy either and didn't think it through.

The loss of his pension may also result in the loss of any health care afforded to her through him as well.
Re: the bold above -

That crossed my mind and still remains to be figured out. I suspect she will ultimately qualify for Medicaid
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Old 11-14-2020, 04:13 PM   #6
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Re: the bold above -

That crossed my mind and still remains to be figured out. I suspect she will ultimately qualify for Medicaid
Yes, I suspect that she will.

My DH is (retired) Union. If no joint and survivor had been taken; no health insurance would have been available to the spouse; in the event spouse survived union member.
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Old 11-14-2020, 04:17 PM   #7
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I knew a guy at work who did that, took a 100% pension with no survivor benefit. The worst happened, five years later he died and left his wife, who had been a SAHM for the last ~20 years, essentially destitute after what little savings were exhausted.

When I retired I was acutely aware of the ramifications of various options (there were about 12-15 different combinations) and went over them in excruciating detail with DW so that she would know exactly what she was signing (spouse had to sign off on it) and what to expect if I pass first, which is of course the most likely outcome. There will be some reduction in income but she'll be a long way from living under a bridge eating cat food.
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Old 11-14-2020, 04:58 PM   #8
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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.
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Old 11-14-2020, 05:19 PM   #9
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I just have a non-cola pension of $1,380/month, and let my wife decide what she wanted, which was 50%. I didnít have a lump sum option, but she took that on hers. Fortunately, we have plenty of savings, so itís not a concern.
Itís a shame they donít do more to counsel people so reliant on a pension on the possible consequences of each choice.
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Old 11-14-2020, 05:41 PM   #10
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Itís a shame they donít do more to counsel people so reliant on a pension on the possible consequences of each choice.
That is really the point of my post. And, to be blunt, to encourage spouses not to "just sign the papers" without knowing the possible outcome.

To add a little background, he was 22 and she was 15 when they got married (no shotgun, they never could have kids). She trusted him to make the financial decisions, but it was a costly mistake
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Old 11-14-2020, 05:45 PM   #11
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My FIL did something similar. This was before they required spousal signatures... He cashed out his union pension as a lump sum... spent the money (he was a gambler), and after the fact, MIL found out. Needless to say she was unhappy. After years of being a SAHM, at home with 6 kids.... she went and got a job with pension possibilities. When they retired - it was on *her* federal pension.


I'm sorry your friend died. And I'm sorry your friend's wife is in this situation.
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Old 11-14-2020, 06:17 PM   #12
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Given that we each have a non-cola pension and SS, losing the deceased's SS will be bad enough. No need to add losing the pension on top of it! We take the (small) hit on the initial monthly payouts as a form of insurance against an unexpected death.
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Old 11-14-2020, 06:56 PM   #13
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As a Military retiree, my wife had the option to select Survivor Benefit Plan [SBP] the day that I retired. She was counseled separately, that she had many options. If we paid one amount, then when I die she could get 10% of my pension, for another amount she could get 20% of my pension, and so on, in 10% increments. She could get 10% of my pension after I die, or she could get 100% of my pension after I die, it all depends on how much of my pension she wants us to pay into the program.

My opinion was not solicited. As a service member, my wishes were not considered. This is specifically her benefit, though it affects how much of my monthly salary I can get paid.

I have gone to a couple of SBP workshops, but again as the service member my input is not considered. They only want to hear from my wife.
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Old 11-14-2020, 07:03 PM   #14
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Age old, ongoing debate with military retirees. "Its too expensive" vice "I wouldn't do without it." They started requiring spouses to sign if they refuse the survivor benefit. Still, the local base survivor services gets distraught phone calls every single week from surviving spouses whose retiree husband died and the check stopped. I could not work there. Those calls would hurt my soul. At least now they have proof the spouse declined it whereas in the past they didn't require it so the retiree could just decline it and never mention it at home. Slowly all of that generation will pass. and the phone at survivor services will continue to ring bc the checks stopped and they "don't remember signing it" I'm sure.
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Old 11-14-2020, 07:04 PM   #15
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As a Military retiree, my wife had the option to select Survivor Benefit Plan [SBP] the day that I retired. She was counseled separately, that she had many options. If we paid one amount, then when I die she could get 10% of my pension, for another amount she could get 20% of my pension, and so on, in 10% increments. She could get 10% of my pension after I die, or she could get 100% of my pension after I die, it all depends on how much of my pension she wants us to pay into the program.

My opinion was not solicited. As a service member, my wishes were not considered. This is specifically her benefit, though it affects how much of my monthly salary I can get paid.

I have gone to a couple of SBP workshops, but again as the service member my input is not considered. They only want to hear from my wife.
Kudo's to the Military for doing it right!

Just one question. You said "if we paid one amount...". Did you actually have pay into the system, or are you talking about the reduction in benefits? I ask only because the wife of our friend made a similar comment that her husband did not want to pay for the benefit. She was under the impression they would have pay up front, and that does not sound correct.
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Old 11-14-2020, 07:18 PM   #16
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For the full SBP benefit (entitling the spouse to 55% of the military retiree's pension), the retiree has 6.5% deducted from their retired pay each month to pay for the coverage. Reduced benefits have proportionally less deducted.



When I retired my wife attended a retirement seminar with other spouses to learn about the SBP plan. After it was done, DW decided she wanted full coverage, so that's what we happily went with - it's very reassuring to my DW to have this as we game out future "what ifs".
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Old 11-14-2020, 07:19 PM   #17
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There are too many more stories like this. I worked with a guy who retired at 55 around 1985 under the old federal CSRS. no social security for those folks. His wife was around his age. He selected no survivor benefits. This may have been before spouse approval was required, but it wouldn't have mattered. The month after he retired in Idaho his tractor rolled over on his farm and killed him. I believe she moved in with a son from a previous marriage.

In my the vague memory section of my brain, I recall one or two other fatal tractor rollovers for recent early retirees in the organization I used to work for
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Old 11-14-2020, 07:23 PM   #18
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Its subtracted monthly from the pension and its pretax. I think that's the world. Theres a tax advantage so its slightly discounted.
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Kudo's to the Military for doing it right!

Just one question. You said "if we paid one amount...". Did you actually have pay into the system, or are you talking about the reduction in benefits? I ask only because the wife of our friend made a similar comment that her husband did not want to pay for the benefit. She was under the impression they would have pay up front, and that does not sound correct.
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Old 11-14-2020, 07:28 PM   #19
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Its subtracted monthly from the pension and its pretax. I think that's the world. Theres a tax advantage so its slightly discounted.
Thanks. That's what I thought. Hers would have been a Union pension, but I suspect handled the same way.
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Old 11-14-2020, 07:34 PM   #20
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So sad, but a choice made by many. DH chose 100% for me after some mildly tense discussions. There was a serious cost benefit discussion. He came around in about 30 seconds once I explained the math and my feelings on the subject. Checks start next month.

I feel for anyone in your friends position. Pension decisions are irrevocable and so very important. I would always recommend 100% J&S no matter the cost. One spouse is going to predecease the other 100% of the time.
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