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John, you are right, it must be planned. Fortunately, we have. Should he die before me, I would receive half of his pension. Plus, we have a life insurance policy on him because we realized years ago that his pension would be more than mine. With half of his pension, all of mine, and Social Security in some form (widow's or my own), I should be able to live in the same manner as we do now without having to touch the life insurance and savings/investments. I wouldn't be saving money like we do now, but that's fine.
I wish everyone would consider the spouse left behind. I have seen too many women particularly struggle financially when the spouse passes. Although this type of planning can be distressing, it needs to be done.
We each have survivor benefits on our pensions. We only had to take a 17% cut in benefits to do it.
The surviving spouse will have two pensions and one age 69 1/2 SS benefit.
I know folks who did and didn't take spousal.
John, you are right, it must be planned. Fortunately, we have. Should he die before me, I would receive half of his pension. Plus, we have a life insurance policy on him because we realized years ago that his pension would be more than mine. With half of his pension, all of mine, and Social Security in some form (widow's or my own), I should be able to live in the same manner as we do now without having to touch the life insurance and savings/investments. I wouldn't be saving money like we do now, but that's fine.
I wish everyone would consider the spouse left behind. I have seen too many women particularly struggle financially when the spouse passes. Although this type of planning can be distressing, it needs to be done.
Quote:
Originally Posted by TuborgP
We each have survivor benefits on our pensions. We only had to take a 17% cut in benefits to do it.
The surviving spouse will have two pensions and one age 69 1/2 SS benefit.
I know folks who did and didn't take spousal.
I agree with you FreshTomato. It really needs to be planned. I know I put my wife directly in my sights to support her with the biggest income should I pass before her. Our retirement income is two pensions from my employer the federal government one military and the other civilian. We will also have SS from each of us as well as a nest egg that consists of a paid off home and savings. Though we are not FRA yet we are planning on taking SS FRA for her and somewhere near 70 for me so that she gets the biggest survivor benefit. She gets a pay cut of 50% if I go before her and I get a pay raise if she goes first. I don't think it is fair but... that is where prior planning comes in. We both are on the same sheet of music as well when it comes to how to maximize our income stream.
Tuborg, sadly I know several who made that mistake and many others mistakes to boot.
We each have an 80% survivor payout on our pensions when one spouse dies. And we will lose one of the SS benefits, and they are about equal. So the last one standing will take a financial hit, but not a serious body blow. I imagine that whichever is left alone will downsize and that will be a big savings, as well as the utilities and insurance on that smaller place will be a savings. I'm sure he/I would sell all but one car, and that reduces insurance, maintenance, gas, etc. Food costs will go down, travel costs will be halved. So we figure that with all of one pension, most of the other, and one SS, plus other miscellaneous income (rental, investment earnings, etc) either of us will be fine on our own. Of course taxes will go down on the lowered income, but having to file single will probably eat up that savings.
So if you are fortunate to reach that point what is your strategy of handling that money?
Savings account
Pass book savings or CD's
After tax investment account
Do you invest in a growth style, balanced or conservative manner
Money under your bed
Sure you have a emergency fund target amount and when you reach that do you change your options.
I read post where a person says they expect to have 30, 50, 100 or more thousand income in retirement and they only plan to live on a amount less that that.
What triggered my thought that this could/might be a helpful topic was a post in another thread where the person said that by delaying SS they would have a combined 90K SS benefit and would be living on about 60k. Cool so what happens with the difference?
You do need to think about the survivor, but that doesn't necessarily mean a survivor benefit. Unless I was hit by a bus, my husband wasn't going to survive me. He had congestive heart failure, a leaky heart valve even after it was replaced, heart disease, eleven or more stents, etc. And he was 10 years older, 76 to my 66.
If you take the hit for survivor's benefit, you may not get it back if that person dies first. Although technically I could have named a new beneficiary, my pension would be recalculated based on the new beneficiary's age. The counselor explained that usually meant an additional hit against your pension. For that reason, almost no one named a replacement beneficiary.
I had $150,000 in term life insurance that would last until I was 75. I had $500k in other retirement savings. We decided that would be enough. I did take a small hit against my pension so that the remainder of my contributions would go to my beneficiary if I died within the next ten years.
My husband died 4 months after I retired. My two adult kids are the beneficiaries of that remainder now. i cancelled the life insurance right before covid hit since I no longer needed it to provide for my husband.
Half in savings, half in Vanguard Money Market. Interest accumulates in place, RMD's go into savings except this year, didn't have to take an RMD. I stopped investing in 2018. Figured I'd quit while I was ahead.
John, you are right, it must be planned.....
I wish everyone would consider the spouse left behind. I have seen too many women particularly struggle financially when the spouse passes. Although this type of planning can be distressing, it needs to be done.
While I am very sure there are widows left with way less than they should have, I know WAY WAY more that are living the high life because of all the sacrifices their husbands made (Afaik, completely voluntary!) Quite a few had husbands that passed away while still working. Like others have posted, There is a balance. I see no need (& DW agrees) that she has a widowed life of income as high as it is while married at the cost of moderate sacrifice up front while we’re both alive. The (one of, if not the) biggest reason to maintain a higher savings/investment balance (if planned) when a couple, is in case one has a medical issue that costs so much, it leaves the other in a bind. So as a couple we have excess income that allows us to even out the troughs of extra expenses over time and maintain a healthy balance.
But if I drop dead tomorrow, her income drops between 30 & 40% AFTER she cashes in on the $500k life insurance policy. She can live easily on that amount whether she decides to pay off the mortgage and invest the remaining, of decides to buy an annuity or just dump it in the portfolio and take $20k/yr from that to raise her income (but still less than what ours is now). This doesn’t include the roughly $100k she would get selling off my “stuff”. If she passes first, all her pension & SS income is gone, and no life insurance to me, since the hit to income is far less. We have discussed it for years. I would not live in as expensive a home, or location as we do on my own. I do this for her. She would prefer to stay right where we are if I go first.
Last edited by Perryinva; 10-13-2020 at 03:15 AM..
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