Don't forget the survivor plan

[btdt22]

That's not correct. Spousal rules and survivorship rules are different. Under survivorship rules, as long as the surviving spouse is full retirement age, he/she will collect 100% of what the deceased spouse was collecting (ignoring GPO and WEP).

My bad I confused my wife taking SS at 66 based on what I would have received if I took SS at 66 rather than at 70, That's what happens when you get 'old'.

 

[corn18]

And a little known rule for SS survivor benefits comes into play if your spouse is younger than you. If you die before 67 and haven't taken your SS benefit yet, the math works out that it is best for your spouse to take SS survivor benefits @ age 63. If your spouse waits beyond that, the benefit does not increase. Some obscure rule called RIB-LIM. I don't even know what that stands for and I don't remember where I got the info, but that's what's in my spreadsheet so I believe it.

EDIT: Found a link to RIB-LIM. Not a simple rule.

https://www.ssa.gov/policy/docs/workingpapers/wp92.html

 

[Rianne]

I'm not seeing any posts with DW/DH input. All these assumptions are based on one partner's thinking. As though, this is how I want to take care of you.

OP, what does your DW think? Are you assuming she'd only be comfortable with $X without you?

 

[H2ODude]

I'm not seeing any posts with DW/DH input. All these assumptions are based on one partner's thinking. As though, this is how I want to take care of you.

OP, what does your DW think? Are you assuming she'd only be comfortable with $X without you?

I haven't spoken up but in defense.....

I can't get DW interested in the least in any of this financial subject. When I took my pension at 60 I asked her about taking a survivor benefit and she said, it was my pension so just take it without survivor (and we've been married since were 19). I did the math and based on SS and investments she could live exactly as we did/do post me. Less accumulation, MAYBE not the random dough blowing like this year (Porsche, trips to Europe and Peru) but she'd be just fine. I'd LOVE to have a discussion with her about this stuff but her eyes roll back in her head and all I get is Uh Huh. What does worry me is that she just doesn't have the knowledge, but since DS moved to our town (for reason completely independent of us being here) I'm a little less concerned, since he and I share financial philosophies.

For what it's worth we could easily smooth the income out by getting an annuity that would start paying out in our seventies but I'm comfortable that all will be well as is. We have a big margin of safety and I've tried to stop doing the spreadsheet modeling of all the <5-10% scenarios. If they happen, we or she will make minor lifestyle adjustments. One less trip a year or keep the car another 2 years? Not a big deal.

 

[ckelly78z]

I can't imagine working all my life with my DW as a partner (married 31 years so far), and not wanting to ensure her future after my demise. We'll take a few hundred less $$ per month to allow her 20 additional years of security should I die before my time.

It's all gambling after that.

 

[brett]

The survivor is provided for in two ways.

The first is financially. No issue.

The second was process. I re-arranged and consolidated our investments and other accounts in such a way that if I dropped dead tomorrow DW would not be wondering what to do next, what bills are paid how, etc. She would only have to make two phone calls, open the safe deposit box, and look over a month's worth of transactions on the credit cards. No surprises...including taxes.

 

[CRLLS]

IMO, if one isn't planning for one to survive the other, and continue to live in the manner that together you have become accustomed to, they simply don't have a plan. They are just hoping.

Whether the other person has a say in how that plan is configured or not is a different matter.

Even though DW (of 46 years) defers most all of our financial decisions to me, she is always number one on my priority list. She knows that I am thinking of her and trusts my judgement. I do pass major decisions thru her before acting. To date, she has never expressed a dissenting viewpoint. If she ever did, we would discuss further and come to a workable compromise.

 

[friar1610]

FWIW- I'm long retired and I'm one of those who waited until 70 for SS (actually 69.5) because I'm madly in love with my better half. That said, your spouse does not necessarily get all your SS when you die. If you waited past 66 to take SS as I did she will only get paid for what you earned at 66 years old.

Second- for those of you military retirees who chose less than 50% in SBP, you can by-back to reach 50% for your spouse. Once a year the SBP folks 'have' opened the option and I took it.

Third- Tricare is not 'free-'medical' for military retirees. When you hit 65 and move to Tricare for Life, you have to pay roughly $140+ per month for medicare B.

Lastly! If your lucky like me, the best thing I ever did was to find my better half, and the very least I can do is make sure she is taken care of in her so-called 'golden-years' when/while I 'fade into the sunset'.



Cheers!

My recollection is that this option hasn't been offered for something like 10-15 years. I looked on the DFAS web site and saw no indication that this is regularly (annually) offered. I'm guessing that if you were able to do it it was a long time ago?

ETA:.and isn't the upper limit 55%?

 

[Animorph]

I'm a little bit on the other spouse side. I was planning to take DW's pension as single life, since she is female and five years younger and will most likely outlive me. In addition, I wouldn't be as interested in travel as she would be, and I'm the one handling the finances and should be more efficient at it than she would be. So I was fine losing that income if I was the survivor.

Turns out we took a lump sum for that pension recently, at her urging. so we're back on equal footing as far as income.

 

[Badger]

I find it interesting that on a forum like this one that the hesitation to making changes to a more frugal lifestyle is not a consideration especially when proposed lower budgets could be more than sufficient to take care of someone comfortably without coming close to being destitute. It may not be in the present lifestyle but now we are talking "need vs want". So cut back on spending now, work a few more years, get rid a a second car and extra insurance when there is only 1 driver, etc. It's a matter of choices/priorities. Isn't that what we do to reach our goals?
I was concerned about making sure my wife would be taken care comfortably with plenty left over for an inheritance for her children so I continued to work for $50k/yr (hers was much less). We were still frugal and saved without sacrificing an enjoyable lifestyle. Now there are no worries and the world is our oyster.


Cheers!

 

[Rianne]

What if DH demise is before pension kicks in:


Pension begins at 65 (Private pension, does not affect SS)

SS at 66.5


We're both 62, DH demise 63 (god forbid, but since we're on the topic)

 

[Niuatoputapu]

Good discussion everyone. Hopefully people realize that survivor plans should be part of every retirement plan.

For us, we will likely opt for 50% survivor benefit on my wife's middle-ish (only 16 years) school teacher pension - if she ever retires. That cut plus loss of her even smaller SS is doable if I am the survivor.

On the other side, GPO/WEP adjustment to SS survivor benefits based on my account take a big bite if I file early, so I plan to file at age 70 and it will make the adjustment less. At that point, her GPO/WEP reduction of survivor benefits is about the same as the reductions I would face with her demise.

Weak part of the plan is if I die before age 70 and the survivor benefits don't grow that 8% per year between age 66.5 and 70. But if I die early there should be more in the portfolio as I would not have had the time to blow as much of the dough. She should be fine, but I think I'll shoot to make 70 anyway.

 

[Moemg]

One of the best things you can leave the survivor is printed instructions about who to call and the numbers .Plus where all the investments are and the phone numbers .When a spouse dies the most clear headed person gets a little scatter brained .

 

[corn18]

One of the best things you can leave the survivor is printed instructions about who to call and the numbers .Plus where all the investments are and the phone numbers .When a spouse dies the most clear headed person gets a little scatter brained .

I agree. I have a diatribe printed out that starts with I’m dead, now what? It outlines where all the money is and life insurance and RSUs and what not. It also gives her the phone number to our Fidelity advisor. I don’t use him but maybe I should get him involved so he can advise my wife better when I die.

 

[Sunset]

Now that the smoke cleared

I felt gas won't change, because we don't go driving around much, and when we do it's together, or to get groceries or some other essential. No driving for fun!

So if one of us is dead, the gas usage will remain pretty much the same.

I can see for folks who go driving for fun by themselves, or drive to visit their own friend/interest by themselves, that driving won't be done by the surviving spouse.

I only referenced gas in my post earlier, and as others point out, if you have 2 cars, you will save by having 1. This assumes a survivor will want only 1 car.

My neighbor a survivor has 2 cars and 2 motorcycles, years after his wife died, so it doesn't always apply.

 

[corn18]

I just ran another scenario with Roth conversions. If I do 100% conversions to the top of the 12%/15% bracket until age 70, my DW is MUCH better off than if I don't do any conversions. The taxes later on as a single really kill her. The conversions+SS+pension push her well into the 25% tax bracket and her SS is 85% taxable (vs. 47% if we do conversions).

So, do those Roth conversions early and often!

 

[GravitySucks]

Totally wrong IMO.

We have two cars... frequently headed in different directions doing different things, and sometimes traveling together... but in any event, if only one then our ~25k miles a year would likely be ~15k... so that is substantial savings in gas, repairs, tires, brake pads, car replacements, etc.

Food will be less too... certainly not 1/2 of current, but still substantial savings.

8lbs of chicken cost the same as 3lbs.... not sure what you're smoking but I might like some.

Just returned from the grocery store.
Chicken legs are 99¢ lb for the family pack, $1.59 for the small pack. It's just me but I buy the large pack and freeze them.
Milk is $2.50 gal and $1.79 for a half gallon. Even the half will have some tossed out.
Even things like potatoes and onions the single item is much more expensive than the large bag.
It's not half, but it's not negligible either.
Travel costs certainly doesn't drop to half. Hotel and car expenses are the same.
Taxes are crazy as a single.
My expenses are probably around 75% of what they would be if DW was still alive. Lifestyle changes are so huge it's impossible to accurately compare.
Largest savings were healthcare and eating out. Fine dining was not fun alone, DGF now picks up the check often.

 

[Teacher Terry]

Not sure why car costs are not half assuming you go from 2 cars to 1. When my husband goes out of town for a month my grocery costs are half.

 

[Oakster]

So, I have my retirement model all set up in excel and did a bunch of what ifs. Basically, as long as I slid into SS @ age 70 with $1, pretty much anything I did would work. SS+COLA pension covers all my expenses with a little room to spare.

I took that info and started running retirement date scenarios. Turns out I can retire @ 55 (2021) if I VPW to zero dollars @ age 71. That sure gives me a lot of money to blow in 15 years. YES!!!!


But then I got to thinking about what happens if I die. My SS benefit is greatly reduced (she has no SS). My pension goes to 55%. And then there are taxes. Hmmm, let's plug all that in:


Sorry hon, it was a good ride. If she dies first, no problem. If I die first, YIKES!!!

I do have laddered term life policies out to age 78, but inflation eats them up pretty bad.

So, now to think about how to break this to my wife. Or what to do to fix that "you go broke, but I'm dead so what do I care" chart.

UPDATE:

Turns out I will need to work longer and save more to prevent survivor poverty. I did reduce her spending by 20% vs. both of us, but even that didn't get her to 100. That sucks. Glad I looked, because I was making big plans for retiring in a little over a year and spending like a madman.

So what happens if you take social security early and invest it, creating a nest egg that will produce money in the event of your death. It will reduce her long term benefit of SS but will improve the upfront nest egg?

 

[pc95]

When do/did you start your Roth conversions?