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Welcome to How to Retire on Time, a show that answers your retirement questions. Say goodbye to the oversimplified advice you've heard hundreds of times. This show is about getting into the nitty-gritty so you can make better decisions as you prepare for retirement. Text your questions to 913-363-1234 and we'll feature them on the show. Don't forget to grab a copy of the book, How to Retire on Time, or check out our resources by going to www.retireontime.com.
Welcome to How to Retire On Time, a show that answers your questions about all things retirement, including income, taxes, Social Security, health care, and more. This show is an extension of the book, How to Retire On Time, which you can grab today on Amazon or by going to RetireOnTime.com. My name is Mike Decker. I'm the author of the book, How to Retire On Time. I'm also a licensed financial adviser, insurance agent, and tax professional, which means when it comes to financial topics, we can cover it all.
Mike:Now that said, please remember this is just a show. Everything you hear should be considered informational as in not financial advice. If you want personalized financial advice, you can request your wealth analysis from my team today by going to www.yourwealthanalysis.com. With me in the studio today is my esteemed cohost and colleague, mister David Franson. Thanks for being here.
David:Yep. Glad to be here.
Mike:David's gonna read your questions, and I will do my best to answer them. You can always submit your questions anytime during the week by texting (913) 363-1234. Again, that number is (913) 363-1234. Let's begin.
David:Hey, Mike. How do you optimize survivor benefits? Are we talking about Social Security here?
Mike:Yeah. I think it's about Social Security, but let's let's kind of expand it a little bit.
David:Okay.
Mike:So survivor benefits, this is spousal risk that we're talking about, and then we're talk specifically, when one spouse is away, what happens? So in Social Security, if if one spouse passes away after you've both filed, surviving spouse would get then the higher of the benefits. Assuming that you've been married long enough to qualify for that. If you and your spouse both qualify for Social Security before you file for Social Security one passes, then you have survivor benefit. This is often misunderstood.
Mike:So survivor benefit is an independent benefit to your own benefit. So many times what we see is we look at these survivor benefit independently, and say, okay, should you file for that earlier on, and then suspend your benefit until 70 years old?
David:Mhmm.
Mike:There's no benefit of taking a survivor benefit past 67 years old of full retirement age, because it does not continue to grow past full retirement age, but your benefit would.
David:Okay. Yeah.
Mike:Now these are two benefits, so you're either gonna take one or the other. You don't take both. So you've got to understand the nuance of this, and run a comparative analysis. Many people have been misled when they call the Social Security office, and they say, hey, I wanna figure out what I should file for my benefit of my husband, or my wife passed, so I qualify for the spousal benefit. They'll say, well, why would you take the spousal benefit?
Mike:Your benefit is more money, and they're almost giving financial advice on what you should take. And this is classic. Then their mind, maybe these people are 20, 30 years old. They're like, hey, just take more money now. Yeah.
Mike:They're not thinking about the problem as a whole. So many times you can take your survivor benefit early, and let your own benefit grow. And then you take your benefit later on.
David:So this is assuming that you haven't filed yet for your own benefit? Yeah. Okay. Okay.
Mike:You can take one or the other, and you can switch between the two.
David:Oh, okay.
Mike:They're two independent plans. It's one of the few times in for Social Security that you can do something like that as a widow or widower. So that's something to consider. The other part of survivor benefit that I think is worth mentioning is pensions. So many pensions will offer a % survivorship, so it it's second to die.
Mike:So you get the benefit for the life of whoever lives the longest.
David:Okay.
Mike:Some people will take a 50% survivor benefit. So let's say you get, I don't know, $2,000 a month for easy math, when the pension person passes, then the surviving spouse gets the thousand dollars, it's 50% survivability. Okay. And if the spouse passes first, then the person with the pension, they just get more money later on. They might say, well, why would anyone take that?
Mike:Well, if you do the % survivability benefit, you might not get $2,000, you might get $1,500. So there is always a trade when it comes to which one you do, and then for those that take the 0% survivability benefit, you might get 2,500, or whatever the offer is, but if you were to pass, the surviving spouse gets nothing. This is where you've got to plan the additional or alternative income streams from your portfolio or other investments or products, and can they offset the potential of a spouse passing early and what that would look like? So it's just understanding the nuance of anyone can die anytime. Yeah.
Mike:Right? The proverbial bus can just smack someone, and and they're gone. Right. And we don't really know when that's gonna happen. Yeah.
Mike:So we all wanna believe that we're gonna live a long healthy life.
David:And why is it always a bus that we're getting hit by in these scenarios? It's the proverbial bus.
Mike:It can never be like
David:a Toyota Corolla or something or Honda Civic. Yeah. Always a but.
Mike:Get anything. It could be one of those e bikes Yeah. Cruising down that just destroy you. But the the point is, I mean, you go spelunking and die. Go scuba diving and die.
Mike:True story. I went to Mexico, Cancun.
David:Okay.
Mike:Okay? I had just gotten my advanced scuba diving certification. I've never been scuba diving before, just in the Okay? And Alki Beach in Washington, which by the way, if you want to get scuba dive certified, don't do it in Washington in February, and don't go into Puget Sound in the winter when it's snowing No. To prove that you can scuba dive.
Mike:That was the coldest day of my life.
David:Yeah. No. I don't like this. But I had
Mike:to grasp. So we're in Cancun, much warmer climate. Yes. Scuba diving for a first time. We're gearing up.
Mike:We test everything, and we're in the boat. Yeah. And then we see one of those tourist kind of submarine things surface with a dude on top. Okay. Passed out.
Mike:So our guides jump out, grab the guy, and then another crew also jump out. They get this guy, they put him on the dock, and they start giving him CPR. And we're seeing like, he's a scuba diver, elderly age, and foam is coming out of his mouth, and we're like, was he poisoned? Uh-huh. Like what happened here?
Mike:Okay. Okay. And the ambulance come, they put him on the stretcher, they keep trying to resuscitate him, they shock him, know, whatever they do. Wow. They take him off the ambulance, and we ask our guy, I said, well, what happened?
Mike:They said, oh, he died. Oh. What what do you mean he died? Yeah. He I don't know.
Mike:He he died. Let's go. And then we went off scuba diving in Cancun, Mexico.
David:Oh, wow.
Mike:On the way back, we got more news. We went diving. Was an incredible experience. Right? It was a blast.
Mike:We come back. Everyone was safe. You you didn't I didn't die. Okay. We come back, and we find out more information.
Mike:So he was one of the local dive instructors who went out on a personal dive.
David:Okay.
Mike:He was experiencing a little bit of chest pain, but decided, whatever, I'll just take some Advil or ibuprofen or whatever, and go scuba diving. So he goes, has a heart attack underwater, which by the way doesn't bode well when you're going deep enough, A lot of problems there. So he has a heart attack. He can't surface enough, so then he dies. Oh, wow.
Mike:Just like that. So
David:Oh my goodness.
Mike:I'm not saying everyone's gonna die scuba diving in Cancun, Mexico from a heart attack underwater. Yeah. But we don't know when that's gonna happen.
David:That's right.
Mike:And so you've got to understand the reality of a spouse could pass early on in retirement. How do you hedge against that? How do you plan for that? And there's other things. It's not just income.
Mike:When you're single in retirement, your taxes go up because the single tax bracket is different. If your life expectancy, your income is, let's say, I don't know, you're gonna get a hundred and 60,000 net of tax, that's your expectation of retirement. You're living a good life, and your spouse passes. Maybe you spend 20,000 less a year, but now you've crossed Irma, so your Medicare costs just increased. Because you're already getting hit by a surcharge.
Mike:So there's all these complexities when it comes to survivorship risk, and how to plan for it.
David:Okay.
Mike:You've gotta stress test your plan. There are 60 risks at least when it comes to retirement that you may not know exist, and there's different variations of these risks that you gotta plan for. Right. But how do you plan for it? Run different test scenarios, and ask yourself, if this were to happen, what would I do?
Mike:And if you have a solution, then great. At least you've planned for it.
David:Yeah. This falls into the thing that you like to say a lot, by being proactive, so that you don't have to be reactive. Right?
Mike:Yeah. The rule of planning that we have at least here is that predetermined guidelines help increase your probability of future success. Mhmm. That's a fancy way of saying, if you know what you're gonna do in situation x, y, or z, you're not panicked if x, y, or z happened, You already have a protocol on how to do it. Mhmm.
Mike:Right? If the lights go out in our house, we have a protocol. We know what to do. Yeah. K?
Mike:If a tornado comes, we have a protocol. We know what to do. Right. If there's a massive ice storm that hits, and we can't drive around, we know what to do. Like, we have planned for different natural disasters, and we know what to do.
Mike:Right. Well, the market crashing is an economic disaster. Do you know what to do? Yeah. If tariffs blow up the global trade, do you know what to do?
Mike:It's not being fearful of what could happen. It's being realistic that it could happen, and then saying, great. Yeah. Here's what we do in that situation. That's it.
Mike:Love that. That's all the time we've got for the show today. If you enjoyed the show, consider subscribing to it wherever you get your podcast. Just search for how to retire on time. Discover if your portfolio is built to weather flat market cycles or if you're missing tax minimization opportunities that you may not even know exist.
Mike:Explore strategies that may be able to help you lower your overall risk while potentially increasing your overall growth and lifestyle flexibility. This is not your ordinary financial analysis. Learn more about Your Wealth Analysis and what it could do for you regardless of your age, asset, or target retirement date, go to www.yourwealthanalysis.com today to learn more and get started.