Survivor benefit. Or not?

[Animorph]

Quote:

Originally Posted by fosterscik I am an outlier it seems. DW is entitled to a $1540/month pension which drops to $1330 if we want 100% survivor benefits. I'm willing to gamble I die first (most likely as the male even though we are essentially the same age). If DW died first, I'm pretty sure my expenses would drop more than her pension loss (I'm more frugal and would do a lot less travelling). If it were my pension I would have a different take, but I only have "alphabet" plans: 401a, 453b, 457, rIRA, and tIRA investments that will support her when I die.

That's similar to our situation, plus I'm 5 years older than DW. Still, by my calculations with the life expectancy tables, that only gives DW a 70% chance of outliving me. But as the financial and less adventurous spouse, I wouldn't miss the pension.

[gerntz]

If spouse is older or in poorer health, taking 100% survivor benefit option might/would be a poor risk.

[nun]

If you are both in good health or if you are in poor health, then I would take the survivor benefit.

[swakyaby]

My father elected to take his pension with 0% survivor benefits. He was 5 years younger than my mother, and told her that when they left this world, they would leave together. He was diagnosed with colon cancer only 4 years after retiring. After surgery and one year of chemo, he (and his pension) were gone.

It's hard to base these decisions on the likelihood of who will pass first. When it comes to health, sometimes it's a crap shoot.

[Act2]

I know several women whose spouses did not provide for survivor benefits, to the wife's detriment.

I feel someone should mention the possible emotional cost to the marriage of not providing the benefit. I have seen that become a source of ongoing resentment in a previously strong marriage where he developed cancer shortly after he RE'd. Prognosis is not good for him and now she cannot retire, with the additional medical costs and likely an early death for him.


Sent from my iPhone using Early Retirement Forum

[nun]

Get the survivor benefit, or at least a benefit certain period.

[samclem]

Quote:

Originally Posted by Act2 I feel someone should mention the possible emotional cost to the marriage of not providing the benefit. I have seen that become a source of ongoing resentment in a previously strong marriage where he developed cancer shortly after he RE'd.

This would be important in some marriages, less so in others. Some couples keep separate careers, separate bank accounts, they take seriously the "I" in "IRA", etc. For these folks, the survivor benefit of a pension might not be worth it, or even logical.

It wasn't like that in our house--DW was a SAHM and my career was considered by us both to be "our" career. So, assuring she was "covered" by my pension if I croaked was always a given, I just needed to figure out the best way to do that (through the employer, with separate insurance/annuity, some form of set-aside self-insurance as a component, etc). As it turned out, the employer-offered Survivor Benefit Plan was the best option. I think that's generally the case. There are few forms of life lower than a shady insurance salesperson who convinces a hapless retiree to dump the survivor benefit in favor of a bunch of high-commission insurance that does the actual job less well.

[Sue J]

For us, we took 100% to survivor when DH retired with a COLAed pension. The reduced benefit was 89% of the single life benefit.

Our reasons were that we are the same age and this happened when we were 55. I had been a stay at home mom for most of my adult life and my SS will only be $535 at 62 to $900 at 70. Hopefully we have a long retirement ahead of us. If I die first DH gets an increase to what the single life with no survivor benefit would had been.

Like samclem, we always considered it to be "our pension".

[Walt34]

Quote:

Originally Posted by Act2 I know several women whose spouses did not provide for survivor benefits, to the wife's detriment.

I only knew of one guy who did that and his wife was a SAHM! My opinion of him went way down when I learned about that. It's just selfish and cruel.

When we moved to WV both of us thought it would be relatively easy for DW to get another job but it didn't work out that way. Then when her father needed more time & attention because of his aging she was happy to have the time without having to deal with a job too.

When I retired it simply didn't occur to me to not take a spousal benefit option. The only question was which one. So at least in our case it is all working out well.

[Big_Hitter]

I signed the consent form for DW so she could choose the straight life annuity.


I'm not sure what we will pick when I start drawing a check - prolly at least 50% J&S.

[Big_Hitter]

Quote:

Originally Posted by Walt34 I only knew of one guy who did that and his wife was a SAHM! My opinion of him went way down when I learned about that. It's just selfish and cruel.

plans subject to IRS Section 417 require that a spouse reject the QJSA benefit - did he get his wife to sign the waiver?

[jIMOh]

Quote:

Originally Posted by Jigger Looking at getting FIRED from my teaching job of 36 years. Is that really early?! The question is whether to take a survivor benefit on my Washington State pension. My wife and I are both 59, she is in good health - I'm struggling with A-fib but hope to hang in there for a long time. The reality is ....who knows? The pension will be $1900 a month. To take the full survivor benefit the total will drop to $1600 a month. We have $1.2 million saved and own $1 million of real estate between two properties. I was quoted a 20 year level term life policy of $100,000 for $130 per month. If I go early the wife will have a decent asset base to live off of, but the income from my pension would not fly out the window if we took the survivor benefit. Your thoughts? Sent from my iPad using Early Retirement Forum

What are annual premiums on whole life insurance for you if policy is $500k?
can you get a 10 pay or 20 pay?

Keep policy in force while you are alive, take only your benefit $1900/mo, and if you die before wife, she collects $500k death benefit.

This is what my parents did.

[Walt34]

Quote:

Originally Posted by Big_Hitter plans subject to IRS Section 417 require that a spouse reject the QJSA benefit - did he get his wife to sign the waiver?

I don't know - this was back in the mid to late '70's. Was that requirement even in effect then? I do recall she was looking into suing the employer but if she signed a waiver she'd have no case.

[Big_Hitter]

Quote:

Originally Posted by Walt34 I don't know - this was back in the mid to late '70's. Was that requirement even in effect then? I do recall she was looking into suing the employer but if she signed a waiver she'd have no case.

No, I think this requirement came about as part of the retirement equity act of 1984