Show Notes
Chris’s Summary:
With Jim traveling, I’m joined by the newest member of the Jim Saulnier & Associates team, Tom Stivers, to review an email from a listener couple who both chose a single life pension, with term life insurance on the higher earner. Their situation raises concerns about Social Security claiming ages, their Minimum Dignity Floor catching up to income if their pensions lack a cost-of-living adjustment, health insurance before Medicare, Roth conversions, and a potential need for a long-term care plan.
Jim’s “Pithy” Summary:
While I’m traveling, Chris brings in Tom Stivers, a newer member of our team, to work through a longer listener email that doesn’t fit a Q&A show. George and Georgette both took their state education pensions without a survivor benefit. George has the bigger pension, so he bought a term life policy to age 78 to help replace his income if he dies first. Chris admits the hair went up on the back of his neck the moment he saw a single life pension, and it went up again at the word “term”. Tom zeroes in on that word too, because almost none of us know the date we’re going to die. But the rest of the email does change the picture.
They believe they might be unicorns, and with $191,000 of secure income once George claims Social Security at 70, against $110,000 of spending, you can see why. Chris pictures it as a race: income starts way out ahead, but spending keeps slowly catching up, and their pensions likely have no automatic cost of living adjustment. Tom also spots a sneaky line about Georgette’s health insurance before Medicare. George thinks Roth conversions matter for taxes and IRMAA. Georgette isn’t worried and doesn’t want to pay the taxes now. And when Chris asks whether conversions should stop once Social Security starts, Tom answers with a question: what’s your 2-1-0 Tax Ordering Number?
And then there’s what the email never mentions: a long-term care plan. Chris explains why their savings may not stretch as far as it sounds if one of them needs care, and why secure income that continues for the survivor can matter. He points out people can obsess over decisions that barely move the needle while missing the ones that do.
The post Single Life Pension Tradeoffs: EDU #2640 appeared first on The Retirement and IRA Show.
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