Survivor Income

Just recently Asher and I were putting together puzzles. He loves to do this and it’s a fun thing to do with him. We get this puzzle all put together, and as we’re finishing it up, we’ve realized we’re one piece short. So, our puzzle looks great, except for this it’s missing this one piece, therefore it looks incomplete. Maybe this has happened to you?  

We’re looking everywhere, all around the playroom in search of that one piece so that we could complete our picture. 

We find the same thing with some retirement plans. And that one piece you’re missing is key to completing your retirement plan. Picture that one piece that’s often overlooked. 

  

 

Retirement Income Planning

Retirement income planning is really important for you to have a financially secure and confident retirement. You want to know that you’re going to get that check in your mailbox, or in this day and age, deposited into your bank account every month like clockwork. 

 

This is one of the biggest things that we need to address and make sure that happens when you retire. 

 

Yes, you’ll get a Social Security paycheck, but oftentimes that is not enough and we need to take the retirement savings and turn it into a paycheck for yourself. 

 

However, there’s one area that often gets overlooked when we’re talking about retirement income and that’s survivor retirement income.  

 

What is going to be left for the survivor? 

 

Survivor Income

There’s a couple things to think about when considering survivor income.  

 

If you’re getting a pension, you have options to choose from. You can take income for your life only or income for your life and your spouse’s life or some combination. 

 

When you start adding a survivor, sometimes it’ll decrease a little bit, but then that means it’s guaranteed for both of you. 

 

The important thing here when we’re thinking about survivor income is that we’re at least thinking about it! 

 

I know that might seem obvious, yet it is very true because oftentimes we will work through our plan and people assume they have all the income they need for retirement. 

 

However, when I ask what happens when one person passes away, they don’t know.

 

If you’re a married couple or you have a partner, this is an important piece of your retirement plan.

 

Your income might be okay to cover your half of the expenses or your income together is a couple. It might be great while you’re both here, but what happens when one person passes away?

 

If you’re married, we know that you’re going to lose this smaller Social Security check for sure, but there’s also other things that could be affected. 

 

The Importance of Communication

We had a couple come in a few years back who had been retired for a while a were taking income his retirement. 

 

Their income was good and they were happy. 

 

As we started talking to them, we started to ask questions about survivor income, which they didn’t know the answers to. 

 

So we made some phone calls to their retirement plan to see how the survivor would work. We found that the biggest chunk of their income, which equated to over 75% of their retirement income, was only guaranteed for his life!  

 

That means if something happened to him, then there would be little to nothing left for her. 

 

This was definitely eye opening and a bit shocking and scary to them! 

 

The good news is that we caught it ahead of time and were able to fix it. We were able to go back and restructure their retirement income plan so that it didn’t end up taking anything away from the amount of income each month, but it guaranteed the income for both of their lives.

 

Survivor income is often one of the most overlooked things, so if you put the plan together but you haven’t considered what will happen if either one of you passes away first, it is important to look at this whether you’re married or you’re just with a partner.  

 

First of all, it takes care of you, yes, but it’s also showing concern for the other person. 

 

Even if you handle everything separately and you know you’re going to be okay because you could replace an income there, what the other person contributes to your monthly expense or vice versa if that other person hasn’t gone through and has the same plan, you’re almost doing them a disservice. 

 

Don’t fall into the survivor income trap.  

 

Make sure that that’s something that we’ve looked at so that someday you’re not sitting there grieving the loss of your spouse or partner and also having to try to figure out where to create retirement income or where your next paycheck is going to come from. And if it is reversed, don’t leave them grieving and having to worry about their income.

 

Don’t overlook survivor income in your retirement plan. 

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