It’s hard to predict all the variations of future events. We opted to just split out bets… specify 50% joint survivor benefits for each of our pensions . (Our plans allowed to specify as none, 25%, 50%, 75% or 100%).
As for the When, my husband decided to start drawing his small-ish pension for previous employer at age 55 while still working. The money was helpful for college years, and he calculated the break even point was somewhere in his 80s. I started my small-ish pension mine when I stopped working (age 58).
This is helpful for me to know what others are doing with pensions. H and I will get ~35-45% of our highest 3 year average salary depending on what we pick. If you look at genetics, I will PROBABLY outlive H by a fair amount. He is 4 years older and the women in my family tend to live into their 90s with decent health. OTOH - his parents are hanging in there (in very poor health for a long time) in their mid to late 80s.
I make 1.75x what H makes, but I will never get any COL adjustment. H’s is with the state, so I believe theirs is adjusted. I could probably live on my pension, but it’d be nice to have something extra. OTOH, H is very poor with money planning. He doesn’t have a clue about anything really, and is a shopaholic. He would have a very hard time living on just his.
He retires from this job next year. I will retire from mine in 4.5-5 years, so we will have to pick sooner vs later. I’m leaning toward some level of spousal support. I’m just not sure how much.
But both of us plan to work in some capacity until Medicare age.
I’m glad my question is helpful to you. I also expect to outlive dh. He already has had an older sister die in her early 60s, and his two other siblings have a host of health woes. We work hard to keep dh’s health top of mind, but the reality is that I expect to outlive him. And like your dh, mine is not great about money. Doesn’t spend a lot but has no basis in reality for how much we bring in and where it goes and our savings, etc. I’ve had to drag him into these conversations, and now he’s much better than when we first married.
Something to consider when looking at pension/survivor benefits, is health insurance. At least in the federal government, if you want a spouse to be able to keep the federal employee health insurance if you die (and spouse doesn’t qualify for it on their own), you need to select survivor benefit.
You know. I need to thank you for this. I assumed we wouldn’t get it through either employer. H’s insurance has been TERRIBLE for spouse/families since he’s been there. It was $800/month for a family in 1998 - that didn’t even cover ANY wellness benefit - nor did those wellness checkups and shots go toward the deductible! He only made <$30K a year! Gross salary! Now the premiums are $2000/month for employee+family.
Mine is better, but about 10 years ago they jacked up the rates so high for retirees so they would leave the plan. 10 years ago it was $2500/month for a retiree only. That was higher than almost everyone’s monthly pension! I know it’s not any better, so I assumed that we would be on our own…
However, since H is on the VA retirement plan, there is health insurance for VA retirees. Looks like it’s only ~$1500/month for both of us. But I’m not sure if he’s eligible. Must have him investigate this further. That would be a game changer, but I won’t get my fingers crossed. Most teachers stay until they are eligible for Medicare because they afford the insurance…
You might also want to look into ACA plans on your state exchange. DW and I are on it now, premiums for the bronze level plan we’re on are about $1700/month to cover us both with a $3300 deductible each.
But - because our income dropped drastically when I retired, and thanks to the Inflation Fighting Act which got rid of the subsidy cliff, the Federal Govt is going to wind up paying half or more of the premium. And that may increase next year as my wife winds down her job. They basically handed us $10k+/yr, and I will not say no.
I believe the IFA goes at least through 2026, maybe later.
Interesting and yeah I’ll price that out when the time comes. Right now I was estimating $3000-4000/month, but it would be nice for it to be less. And this will be in 2028 once I retire. Who know what things will look like then.
But high deductibles don’t scare me. Ours is $5000/person now. So I’m used to that.
@Youdon_tsay At our house, H will be doing the joint and 50% survivor pension to protect me, since my own pension/401k was significantly affected by the medical stuff driving me out of the workforce. We are definitely going to keep his medical plan in retirement, and may keep Medicare as well. Depends on the donut hole for medications, which is the big risky hole in our future. He’s still working to rack up more pension and get to the 10% bonus round (at 30 years, he goes from 1% per year accrual to 1.1%. It will add 3-3.5 years of service to his calculation.
If you can take your pension now (with a reduction? without? spouse waives survivor benefit?), you can always stash it in the bank and let it grow. If you take it later, it may or may not be adjusted for later receipt, and if you get hit by the bus the following week, noone would get anything out of it. I used to be a pension administrator – PM me and I can get more into the weeds if you want.
My pension started payouts at 60. No cashout option. It’s tiny and it just goes straight into savings. All my other retirement pensions and 401ks went into a R/O IRA.
I tried calling back for clarification of whether dh gets anything if I die before activating my pension, but they were closed for the day. I posed the question to other retirees, and one said that he’s pretty sure that the company built in a life insurance benefit that would pay out a portion of the untapped pension in case I died before activating my pension but that the life insurance goes away once you begin drawing the pension. I’ll find out tomorrow, but I may PM you anyway!
DH retired with pension and we did 100% joint and survivor benefits for his (larger) pension. When I retired, we did 50% joint and survivor for my (smaller) pension. None are indexed for inflation, so we felt that it was important for us both to have the protection of the extra money, and they both have bump up provisions so that if my spouse predecesses me, my retirement benefit bumps back up to what it would have been without covering him, and visa versa.
That’s a good question to be asking. It may be that you already made that spousal coverage decision long ago when you retired(?). But even if you did, hopefully you could update the designation if you haven’t started payments yet.
For my pension decision, I had to include spouse age. Based on actuary tables, they defined the “cost” (pension reduction) for spouse coverage at different levels. Probably this kind of thing varies a lot from company to company.
My husband’s pension was a defined pension plan. The single payer option was not twice as much as the 100% survivorship option. And there was a lump sum option also.
After lots of talk, thought and discussion, some of which was a bit contentious , we picked the 50/50 option. Half of the pension was a lump sum and half is paid out every month until both of us pass away.
The stock market hasn’t been kind to the lump sum yet. But we (and our financial advisors) are sure that will turn around. And we should have some to pass on to our heirs instead of the pension money stopping with both of our deaths.
The other consideration is that we’ve paid into social security and will have that income stream in the future, many government pensions don’t have that option.
Thank you. I have not done a backtest but like I said, this is the fun money pot.
Futures – A bit too time consuming and esoteric for me. I like to keep things simple. At some level, the appeal of a leveraged ETF with a stop trigger is fairly simple. Hence… @shawbridge Thanks for sharing! I stay away from hedge firms and to be honest, many of the structures/instruments that hedge funds use are available to retail investors now at a deeply discounted price. See inverse and leveraged ETFs.
@1dadinNC, my appetite for alternatives leans to investments that are relatively uncorrelated with the market or that remove more of the downside volatility than the upside volatility. I can’t see investing for my own account with either inverse or leveraged ETFs. But, I can see the allure of trying to create good bets. In my case, I know how much work by very smart folks went into choosing the trades and there is no way for me to put that time or care into my investment choices. I’ve decided that my main line of business has volatility and that my investments should not be high risk (except when I start a new venture).
Downside volatility in an ETF can be managed by a stop loss order. Just adjust every 60 days or so.
Just for $hits and giggles:
Adam Monk is the now-retired Chicago Sun-Times investment guru and Brazilian cinnamon-ring tail cebus monkey who picked his stocks by circling them in the newspaper with a red pen. Outperforming the indexes four years in a row, from 2003-2006, Monk did it again in 2008 with a portfolio that only lost 14% while most money managers were posting losses upwards of 35%. (The “Free by 50” financial blog noted that Adam Monk’s returns bested the Mad Money host Jim Cramer’s choices by significant margins 2 out of 3 years.)
I just feel too young for this thread. What company even offers pensions anymore? We’re just gonna have to make do with 401(k)s – since even Social Security will be drained by the time we retire.
Haha Hoggirl I feel the same . But, based on rec from here I’ve been listening to “The Retirement Answer Man” podcast for about 18 months (very low-key & accessible). I finally feel like I have a working knowledge of so many more areas of this topic (I was likely much less knowledgeable than you at the outset!).
All the fancy stock/tax stuff here goes over my head but at least I know there are nuances and that alone is helpful, LOL.
@1dadinNC - omg that Cramer vs. monkey stock picking article. I have to say though - Mad Money et al. has at least provided my husband some understanding of how the market works, general concepts, etc. (he wasn’t into it before at all). I guess that’s good?
I don’t know how old you are, but I, too, am always surprised at the number of people on here who have pensions. The only people I know IRL who have those are government workers and public K-12 educators.
My husband and I do not factor in SS in planning our retirement. We do, however, count on Medicare. Remains to be seen what happens with that. We are still 5 and 6 years respectively away from the current eligibility age.
, we picked the 50/50 option. Half of the pension was a lump sum and half is paid out every month until both of us pass away.
. But, based on rec from here I’ve been listening to “The Retirement Answer Man” podcast for about 18 months (very low-key & accessible). I finally feel like I have a working knowledge of so many more areas of this topic (I was likely much less knowledgeable than you at the outset!).