Don't forget the survivor plan

[ckelly78z]

This is a big concern of mine as well, we are both 54, she is hoping to retire at 57 with a bigger eventual SS payment than me (she makes more), but with no pension. I hope to go at 62 with SS, and a 28 year pension, but taking a full survivorship because of my health issues. She comes from a long line of long living females, so it is only right that I care for her after i'm gone.

There might be another option for you (not offered at my Megacorp). It would be to take a lump sum payment for your pension, and invest it appropriately for her to live a long time.

 

[corn18]

Your wife should receive your full SS benefit when you die, so she would only lose whatever spousal benefit she may receive while you're living (I think that's 50% or less of your benefit).

As for your pension, are any other payment options offered? My wife's pension has 100%, 66%, and 50% survivor options. We are going to opt for the 100% option so our income will stay the same regardless of who dies first.

The only other options are to reduce spending or increase savings. It doesn't sound like you want to reduce her spending (even though she won't have YOUR expenses anymore), so that seems to narrow your options to working longer and saving more.

This is a big concern of mine as well, we are both 54, she is hoping to retire at 57 with a bigger eventual SS payment than me (she makes more), but with no pension. I hope to go at 62 with SS, and a 28 year pension, but taking a full survivorship because of my health issues. She comes from a long line of long living females, so it is only right that I care for her after i'm gone.

There might be another option for you (not offered at my Megacorp). It would be to take a lump sum payment for your pension, and invest it appropriately for her to live a long time.

My pension is a military pension and I have been receiving it since 42. The highest option was 55% survivorship. Glad I opted for that.

 

[athena53]

Lots of women who are widowed travel by themselves or in groups . I was widowed at 51 and traveled by myself for years and not on cruises .

I'm 66 and widowed. I spent over $20K on the travel I did this year (yeah, I'm detail-oriented enough to allocate it by travel year regardless of when payments were made). It included a trip to Charleston for a family wedding, two small-ship cruises (Hawaii and the Sea of Cortez), two trips to Chicago from Des Moines with my 5-year old granddaughter, and a long weekend at my favorite B&B in Hermann, MO with the guy I'm dating. Road trip to SC scheduled around Christmas.

But back to the OT- I'm very happy to see couples considering what happens to the survivor. I've seen many cases, both among friends at church who lost their husbands, and on a Widows and Widowers group on-line, in which the survivor, usually the wife, ends up having to move out of the house and sell because finances are harder after the loss. (My step-Grandma discovered after her first husband died that he'd selected a higher pension benefit with no Survivor option- you can't do that anymore without the notarized consent of the spouse).

 

[Teacher Terry]

We also elected the 100% survivors option for both pensions. The law about signing off on a pension varies by state. In some states the spouse may never know what’s chosen which is crappy. I am not saying women shouldn’t travel alone but merely that I wouldn’t enjoy it. Since you know she would it wouldn’t be a area to cut.

 

[f35phixer]

Hey Hole, sent you a PM about spreadsheet....

 

[Sunset]

OP - have you used the firecalc ?

 

[corn18]

Hey Hole, sent you a PM about spreadsheet....

OP - have you used the firecalc ?

I have used Firecalc. But I now use The Flexible Retirement Planner (FRP)

https://www.flexibleretirementplanner.com/wp/

I have validated that Firecalc and FRP spit out the same results for identical scenarios. But FRP is much more flexible for modeling complex scenarios.

For those that would like to replicate my model in excel, it is so complex that I lose track of all the variables. I have modeled how much of my SS is taxed every year of retirement (I have an actual IRS Pub 915 worksheet in my spreadsheet). I also model 2020 federal taxes vs. 2025. And I can select my Roth conversion rate from retirement age to age 70. Then there are the myriad what ifs I have in there that recalculate everything and split out that withdrawal graph. It is, by far, the most complex spreadsheet I have ever built and I do not think it could be adapted to anyone else.

That being said, I do run all my scenarios through FRP and bounce them off my model. In every case, FRP is spot on. I have found that adding more to my spreadsheet doesn't make it any better than the much simpler FRP. It really comes down to a number. If we have $XXM and a paid off house, we can retire.

This is just the main section of inputs for my model. There are hundreds of others spread all over the place.

 

[pacergal]

We also choose 100% survivor on our pensions and adjusted our budget down a bit.
If I recall, it was a difference of several thousand dollars a year, but the comfort of knowing the biggest amount of our income would not change after death of one of us was more important .

 

[kgtest]

Well, that's not our plan. We have a base budget of $110k and will decide each year how much above that we want to spend on travel and blow that dough. Right now, that is $25k until age 70 and $12.5k from 70-80. That is the lifestyle we have chosen. If someone wants to live on an average income, that's fine, but that's not our goal.

If you are gone, theoretically X=(.5)110k

So 55k for her, 55k for you...either way within 5/10% of that # after survivor benefit would be fine IMHO.

Once you are pushing daisies, your half of the food budget drops to 0

 

[athena53]

If you are gone, theoretically X=(.5)110k

So 55k for her, 55k for you...either way within 5/10% of that # after survivor benefit would be fine IMHO.

Once you are pushing daisies, your half of the food budget drops to 0

I wouldn't say that at all, although that's the underlying assumption in a lot of the tax code (married couples get twice the standard deduction that singles do, the IRMAA adjustments start at an income level half that for marrieds if you're single, etc.).

Here are some things that don't drop or aren't cut in half: mortgage, rent, property taxes, homeowners insurance, car insurance and maintenance (unless you cut down from one to two cars but even then you might keep the one that's worth more), utilities. Some expenses will increase faster than inflation over time as the surviving spouse needs to hire out more work or incurs more out-of-pocket medical expenses.

I'd do a very careful analysis of spending patterns before assuming that the survivor can live on 55% of what the couple is spending. For many widows, the 33% drop from Wage Earner and Spouse to Survivor benefit is devastating.

 

[Gumby]

It appears to me that the cost of a household goes up by approximately the square root of the number of people in it. So if 1 person spends X, 2 people will spend 1.414 X, 3 will spend 1.732 X, 4 will spend 2 X. That's the method the Congressional Budget Office uses to normalize household income for comparison purposes. So if 1 person in a two person household dies, costs will go down only by about 30% (1-(1/1.414))x100.

 

[pb4uski]

^^^ That seems sensible for a couple... a single would spend 70% of what a couple spends. IIRC that is in line with what forum members have opined to on threads in the past.

SS would be a 33%-50% cut if one person of a couple dies.

 

[Vacation4us]

My EX husband used to say he didn’t care what happened to me and the kids if he died.

Not the reason he is my EX but his attitude towards his family’s place of importance to him surely contributed to our marriages demise.

New DH likes to brag I married him for his pension. He is choosing 100% survivor benefit with a pop up feature if I pass before him. I appreciate a partner who cares about me weather he is here or gone.

My Father passed 19 years ago today at 58 , mom has been fine and never needed to go back to work. She travels more than anyone I know. Thanks Dad. Thanks for my education and making sure Mom wouldn’t be a financial burden.

I guarantee Mom doesn’t spend 55%, she often commented things aren’t much cheaper for 1.

 

[corn18]

I did a thorough scrub and found a few places that I thought would go down:

Food
Dining
Gas
Life Insurance (I’m dead)
Medical (only one to pay for)
New cars (she will still keep the roadster as a second car but only needs one new car every 10 years vs one every 5 years when we both had cars)

That’s about all. Things I didn’t change:

Pets
Gifts
Health and beauty
Home stuff and maint
Entertainment
Utilities
Auto ins
Taxes (this turns out to be a wash In our scenario)
Travel

 

[pb4uski]

Why wouldn't entertainment and travel be lower.... buying one admission or plane ticket rather than two... unless you're planning for her gigolo.

 

[btdt22]

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!

 

[corn18]

Why wouldn't entertainment and travel be lower.... buying one admission or plane ticket rather than two... unless you're planning for her gigolo.

She’ll probably travel more after I’m dead.

 

[athena53]

Why wouldn't entertainment and travel be lower.... buying one admission or plane ticket rather than two... unless you're planning for her gigolo.

Plane fares- yes. Hotels and other accommodations- most likely no. Cruises- nearly all include a Single Supplement. Get a magnifying glass and check the fine print on the footnote after the "Per Person/Double Occupancy" price and the Single price can be as high as 175% of the PP/Double Occupancy price. One of the reasons I love Overseas Adventure Travel is that they don't charge a Single Supplement- but they're pretty expensive to begin with.

 

[MissMolly]

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!

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).

 

[corn18]

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).

This is correct. But if I die, she loses spousal benefits which is about a 33% reduction from what our total benefits were before I died. That’s not chump change.

 

[Sunset]

I did a thorough scrub and found a few places that I thought would go down:

Food
Dining
Gas
Life Insurance (I’m dead)
Medical (only one to pay for)
New cars (she will still keep the roadster as a second car but only needs one new car every 10 years vs one every 5 years when we both had cars)

That’s about all. Things I didn’t change:

Pets
Gifts
Health and beauty
Home stuff and maint
Entertainment
Utilities
Auto ins
Taxes (this turns out to be a wash In our scenario)
Travel

So funny, as I was reading the thread, I was thinking well gas is not cheaper just because I'm alone in the car, vs when DW is with me..

So no way gas is cheaper, when you are dead, she will have to drive to all the places you do to get the stuff you get, since you aren't there. Plus drive to see her friends more, since nobody to talk to.

Same with food, some of it won't get cheaper, just because you buy less, example milk, buying 2 quarts costs about the same as 1 gallon. I found this super annoying this past summer while camping, as my cooler didn't have enough room for a gallon jug.
At the grocery store, all the savings on meat, etc are for family packs, you know 8 lbs of chicken legs cost the same as a 3lb pack for an individual if they like chicken.

 

[corn18]

So funny, as I was reading the thread, I was thinking well gas is not cheaper just because I'm alone in the car, vs when DW is with me..

So no way gas is cheaper, when you are dead, she will have to drive to all the places you do to get the stuff you get, since you aren't there. Plus drive to see her friends more, since nobody to talk to.

Same with food, some of it won't get cheaper, just because you buy less, example milk, buying 2 quarts costs about the same as 1 gallon. I found this super annoying this past summer while camping, as my cooler didn't have enough room for a gallon jug.
At the grocery store, all the savings on meat, etc are for family packs, you know 8 lbs of chicken legs cost the same as a 3lb pack for an individual if they like chicken.

So you’re saying that it costs the exact same amount for everything after one person literally is not there at all? I find that implausible.

 

[pb4uski]

This is correct. But if I die, she loses spousal benefits which is about a 33% reduction from what our total benefits were before I died. That’s not chump change.

True if SS is your only source of income... but for most people SS is a significant but not sole source of income.

If SS is half of income then the reduction is only 17%. Ours will likely be in that range since my pension is 100% joint life and the other source of income is tIRA withdrawals.

 

[pb4uski]

So funny, as I was reading the thread, I was thinking well gas is not cheaper just because I'm alone in the car, vs when DW is with me..

So no way gas is cheaper, when you are dead, she will have to drive to all the places you do to get the stuff you get, since you aren't there. Plus drive to see her friends more, since nobody to talk to.

Same with food, some of it won't get cheaper, just because you buy less, example milk, buying 2 quarts costs about the same as 1 gallon. I found this super annoying this past summer while camping, as my cooler didn't have enough room for a gallon jug.
At the grocery store, all the savings on meat, etc are for family packs, you know 8 lbs of chicken legs cost the same as a 3lb pack for an individual if they like chicken.

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.

 

[jollystomper]

For us, about 9-10 categories account for 90% of our spending. I did an analysis and estimate that spending would be reduced about 60% from those categories. In addition, I'm now looking at paying off the house next year, since we have "excess" cash... in any case, should I die before this is done, or before we downsize, she would pay the house off without having to touch other investments.

In truth I (and she) is not concerned about being able to afford to live on our plan with the reduced income. The bigger concern is the relatives and friends who might suddenly want to be in her life if they perceive she is a "rich" widow - that is where the most financial risk lies.