Will Your Partner Live in the Street When You Die?
No one likes to think about their own demise.
Maybe that's because it is almost impossible to imagine what the world will be like when you are no longer here, or maybe the thought of your own mortality is not very comfortable.
However, the plain fact (no matter how uncomfortable it is) is that no one lives forever and when a person passes away, he may well leave a grieving partner behind him.
Imagine the following scenario: A widow walks into my office and tells me, "Everything was fine until my husband died.
That's when his pension stopped.
" With tears in her eyes, she asks, "How will I support myself now?" This scenario is far from being unusual.
All too often, I run into families where only one spouse receives a pension.
In that case, it is important to plan for the eventuality of the pension owner's passing.
What will happen to the surviving spouse? Most pensions have the option of receiving a higher payout during the lifetime of the worker, or to opt for slightly lower payments, and have the option of a partial payment (usually between 40 - 60% of the original pension) after the worker's death.
In "second-to-die" pensions, the monthly amount received will be less than pensions that only cover a single life.
However, even a diminished income stream still comes in handy when paying the bills.
And, depending on the length of retirement, the total amount received from the insurance company could be greater in a surviving spouse pension.
When interviewing one couple recently, I discovered that the husband had chosen single-life coverage for his pension.
I asked what his wife will live on after he passes away, and he replied, "She's very resourceful.
She'll figure something out.
" When I pressed further and asked why he didn't select a second-to-die option, he responded, "By covering only my life, we get a higher monthly income while I'm alive," he answered.
"And nothing when you're gone," I added.
Although on the one hand, this man's wife may indeed be a very smart and resourceful person, who knows what her situation will be if she is not the first person to pass away? How healthy will she be by this time? What if she is herself so infirm by then that she will have no way of supporting herself and will need medical care? Are her children able to help her? And if they can't help her, who will? When thinking about a pension, all of these questions require some consideration.
Dealing with the loss of a spouse is difficult enough, so make it easier for your loved ones by ensuring that they will have the financial resources to take care of themselves.
If you are nearing or already in your retirement years, it is imperative that you prepare a financial plan to help you determine which pension options suit both your and your spouse's needs most appropriately.
By looking at all your assets and cash-flow possibilities, an experienced, licensed adviser can help you to get a better sense of what you can hope for going forward.
Disclaimer: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show.
He is a licensed financial professional both in the U.
S.
and Israel.
Securities offered through Portfolio Resources Group, Inc.
, Member FINRA, SIPC, MSRB, NFA, SIFMA.
Accounts carried by National Financial Services LLC.
Member NYSE/SIPC, a Fidelity Investments company.
Maybe that's because it is almost impossible to imagine what the world will be like when you are no longer here, or maybe the thought of your own mortality is not very comfortable.
However, the plain fact (no matter how uncomfortable it is) is that no one lives forever and when a person passes away, he may well leave a grieving partner behind him.
Imagine the following scenario: A widow walks into my office and tells me, "Everything was fine until my husband died.
That's when his pension stopped.
" With tears in her eyes, she asks, "How will I support myself now?" This scenario is far from being unusual.
All too often, I run into families where only one spouse receives a pension.
In that case, it is important to plan for the eventuality of the pension owner's passing.
What will happen to the surviving spouse? Most pensions have the option of receiving a higher payout during the lifetime of the worker, or to opt for slightly lower payments, and have the option of a partial payment (usually between 40 - 60% of the original pension) after the worker's death.
In "second-to-die" pensions, the monthly amount received will be less than pensions that only cover a single life.
However, even a diminished income stream still comes in handy when paying the bills.
And, depending on the length of retirement, the total amount received from the insurance company could be greater in a surviving spouse pension.
When interviewing one couple recently, I discovered that the husband had chosen single-life coverage for his pension.
I asked what his wife will live on after he passes away, and he replied, "She's very resourceful.
She'll figure something out.
" When I pressed further and asked why he didn't select a second-to-die option, he responded, "By covering only my life, we get a higher monthly income while I'm alive," he answered.
"And nothing when you're gone," I added.
Although on the one hand, this man's wife may indeed be a very smart and resourceful person, who knows what her situation will be if she is not the first person to pass away? How healthy will she be by this time? What if she is herself so infirm by then that she will have no way of supporting herself and will need medical care? Are her children able to help her? And if they can't help her, who will? When thinking about a pension, all of these questions require some consideration.
Dealing with the loss of a spouse is difficult enough, so make it easier for your loved ones by ensuring that they will have the financial resources to take care of themselves.
If you are nearing or already in your retirement years, it is imperative that you prepare a financial plan to help you determine which pension options suit both your and your spouse's needs most appropriately.
By looking at all your assets and cash-flow possibilities, an experienced, licensed adviser can help you to get a better sense of what you can hope for going forward.
Disclaimer: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show.
He is a licensed financial professional both in the U.
S.
and Israel.
Securities offered through Portfolio Resources Group, Inc.
, Member FINRA, SIPC, MSRB, NFA, SIFMA.
Accounts carried by National Financial Services LLC.
Member NYSE/SIPC, a Fidelity Investments company.
