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I came across this article that I thought could be of use for some here and food for discussion for the rest of us. We get many people that are new to retirement and are in the 10 to 15 year out zone and this fairly long piece could give them some answers and ideas. Seeking Alpha is described below. I think the advice they have many times is spot on. They have an app for your phone if you subscribe to them. I think they also offer services like a good financial advisor. Some might disagree but... everyone has opinions. Let's see what sort of discussions this will bring.
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I don't like that plan for John and Lisa at all. We are similarly situated like the example couple(except with both have small pensions) and having that plan would freak me out. I didn't see a pension on there so I'm assuming the income is from SS and the 1.25 mill. So they have John taking his SS at 62 and Lisa at 70. The article says they will take more money from the 1.25 mill until Lisa hits 70 and they can get her SS at a higher rate. It has them living off that 1.25 mill the two years before they can collect SS in the form of switching some of it to cash reserve to cover their expenses and reducing the amount to 850,000. Switching investment types could cost them and they don't have that much to lose anyway. It has a couple going from 125000 year income to 50000. At 50000 even with lower taxes and expenses it doesn't leave much room for play and home repair and emergencies. Plus it's relying on both spouses being alive to collect 2 SS checks. If one of them dies (especially if it's Lisa) the expenses go only minimally down (still have to pay for a place to live on one income) but the income gets reduced drastically. Then if one of them gets really sick before they die they will have to tap into that nest egg meant for income generation and that could go quickly. Plus if some of that income is in stocks they could be forced to sell in a down market.
Worse case scenario is Lisa dies, draining down some of the nest egg in the process, and takes her bigger SS check with her. Now John is left with 18,000 a year (1500 month SS) plus whatever remains of that 1.25 or 850000 however you look at it. He has to pay living expenses with his SS alone. He goes from making 125000 with a partner to 18000 alone. Too risky.
John and Lisa is a series at SeekingAlpha.com. I suggest one read as many essays of the series as possible before commenting. Personally, I don't like the John and Lisa series for a number of reasons, the biggest being that they make a lot of stupid moves financially for a couple in a higher income bracket.
John and Lisa is a series at SeekingAlpha.com. I suggest one read as many essays of the series as possible before commenting. Personally, I don't like the John and Lisa series for a number of reasons, the biggest being that they make a lot of stupid moves financially for a couple in a higher income bracket.
I tried to find the series and couldn't figure it out. Can you link me up? What mistakes are they making? I wouldn't be surprised if we are doing exactly the same thing as they are.
"Worse case scenario is Lisa dies, draining down some of the nest egg in the process, and takes her bigger SS check with her. "
I did not read the article or plan or whatever, but this is wrong, assuming that Lisa's benefit when she dies is more than her husbands then he gets her increased benefit instead of what he was getting.
"Worse case scenario is Lisa dies, draining down some of the nest egg in the process, and takes her bigger SS check with her. "
I did not read the article or plan or whatever, but this is wrong, assuming that Lisa's benefit when she dies is more than her husbands then he gets her increased benefit instead of what he was getting.
That's what I thought too up until a week ago. I actually planned in into our possible scenarios. It is now my understanding he would get her benefit if she had taken it at his age. for example my benefit at 62 is about 150 more than the hubby's. I thought I could wait until 70 and if I died he would just slide into my benefit of 2900. Instead, come to find out he is eligible for the 1550 I would have gotten at 62 (instead of his 1400)because he took his benefit at 62. Unless I'm not understanding it correctly now. I would love to be wrong on this.
You are wrong, if you died and he was at least his FRA at the time if yours was higher he would receive what yours was or would have been if you had not started collecting yet and that amount would include any additional credits you had earned by waiting.
If he were under FRA it would be reduced some for each month under FRA he was. Survivor benefits are quite different from retirement benefits.
You are wrong, if you died and he was at least his FRA at the time if yours was higher he would receive what yours was or would have been if you had not started collecting yet and that amount would include any additional credits you had earned by waiting.
If he were under FRA it would be reduced some for each month under FRA he was. Survivor benefits are quite different from retirement benefits.
So if he takes his at 62 (FRA is 67) and I take mine at 70 how much would be deducted for a $3000 check? I am younger so he would be older than me at the time he would be apply for my benefit.
The fact that he was 62 when he started his RETIREMENT benefit does not affect what he would collect as a SURVIVOR, though since you are younger presumably you would outlive him, but if you did not then if he were 67 or older when you died he would collect the full benefit you were entitled to at the time of your death. Of course he would stop collecting his own benefit.
Go to the SS website and look under survivor benefits and it will explain it all and give you a chart with the deductions for being under FRA
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