Help! My husband is retiring...

[Birdie dog]

I need some advice (and yes, I'll call my financial advisor also).

My husband is 10 years older than I am. He has worked for the state for 25 years and retired from the military after 20 years. We don't have to worry about insurance because we have Tricare...

I am an ER nurse and have been a nurse for more than 20 years. I make very good money - I've worked weekend contacts for years and I've worked OT for years because I like to travel.

Financially, I think we're pretty good. DH has both military and state retirement and does not plan on taking social security any time soon. He is talking about picking up something to do- like a job at Costco or something for spending money and something to do. I put 17% of my earnings in retirement plus my hospital matches 5%. Things are looking good that if anything happened to him, I could easily support myself. I plan on retiring (or maybe just cutting back in about 14 years). Our house will be paid off in 9 years. My husband's car is paid in full and mine still has a payment but at zero percent interest so I'm not in a huge hurry to pay it off early.

So, here's my question... My husband has 3 options to chose from him regarding his state retirement.

#1- full retirement amount. This is the most paid monthly. It's less than $1000 less per month than he currently earns. He'll supplement the amount he contributes to the household with money from his military retirement. So, his pay check (which goes into a joint checking account and pays bills and goes into savings and our travel account) will remain exactly what it is now.

#2- about $1000 less payout per month take home than #1, but I would get that amount forever. Even if my husband died. (I won't do this one)

#3- halfway between 1 and 2- It would pay a a few hundred less than 1, but there would be a continued death payout of about 1/2 of the #1 retirement. So, if my husband died, I'd get a check monthly...

I'm kind of unsure if I should go with 1 or 3. With 1, I'd buy a term life insurance policy so that if something happened to my husband before the 9 years of the mortgage is over, I could pay off the house. With 3, I'd have to come up with some money for the house payment but would get a partial check for the rest of my life... (Maybe I'd buy a smaller term policy?? I don't know). I do feel pretty comfortable that once the house is paid off, I can live comfortably on my earnings and savings and don't need to depend on my husbands money.

I'm pretty stressed out by making this decision and I know I'm not thinking everything through, so I'd love any advice you can give me. I have a few months to make a decision on which plan we'll do (and again, I'll be checking with my financial guy too).

Thanks.

 

[starry_solo]

I would be choosing between #2 or #3 myself.

for #1, what happens if he dies within a month of retiring? Do you get a return of contributions or are you SOL?

 

[Birdie dog]

I would be choosing between #2 or #3 myself.

for #1, what happens if he dies within a month of retiring? Do you get a return of contributions or are you SOL?

I'd be SOL, but I'd buy a term life policy so not really.

 

[ruadisneyfan2]

Have you priced a term life insurance policy? I think the monthly cost of that should be a factor.

Anyway, I'm not really understanding why you are so against #2. My dh is also 10 years older than me so I can sympathize with your concerns. Also, I have a coworker who's husband was 10 years older than her. He died when she was only 62. He was a retired police officer and had opted for her to get the pension if he died before her. She always says how grateful she is that he did that for her. She is able to work PT.

 

[Pamlur]

Any life insurance is so expensive now, please look into what a term life policy would cost before you make your choice. I put Key Man Insurance on the two young men who will be buying my company, and it was shockingly expensive.

 

[TwoMisfits]

I need some advice (and yes, I'll call my financial advisor also).

My husband is 10 years older than I am. He has worked for the state for 25 years and retired from the military after 20 years. We don't have to worry about insurance because we have Tricare...

I am an ER nurse and have been a nurse for more than 20 years. I make very good money - I've worked weekend contacts for years and I've worked OT for years because I like to travel.

Financially, I think we're pretty good. DH has both military and state retirement and does not plan on taking social security any time soon. He is talking about picking up something to do- like a job at Costco or something for spending money and something to do. I put 17% of my earnings in retirement plus my hospital matches 5%. Things are looking good that if anything happened to him, I could easily support myself. I plan on retiring (or maybe just cutting back in about 14 years). Our house will be paid off in 9 years. My husband's car is paid in full and mine still has a payment but at zero percent interest so I'm not in a huge hurry to pay it off early.

So, here's my question... My husband has 3 options to chose from him regarding his state retirement.

#1- full retirement amount. This is the most paid monthly. It's less than $1000 less per month than he currently earns. He'll supplement the amount he contributes to the household with money from his military retirement. So, his pay check (which goes into a joint checking account and pays bills and goes into savings and our travel account) will remain exactly what it is now.

#2- about $1000 less payout per month take home than #1, but I would get that amount forever. Even if my husband died. (I won't do this one)

#3- halfway between 1 and 2- It would pay a a few hundred less than 1, but there would be a continued death payout of about 1/2 of the #1 retirement. So, if my husband died, I'd get a check monthly...

I'm kind of unsure if I should go with 1 or 3. With 1, I'd buy a term life insurance policy so that if something happened to my husband before the 9 years of the mortgage is over, I could pay off the house. With 3, I'd have to come up with some money for the house payment but would get a partial check for the rest of my life... (Maybe I'd buy a smaller term policy?? I don't know). I do feel pretty comfortable that once the house is paid off, I can live comfortably on my earnings and savings and don't need to depend on my husbands money.

I'm pretty stressed out by making this decision and I know I'm not thinking everything through, so I'd love any advice you can give me. I have a few months to make a decision on which plan we'll do (and again, I'll be checking with my financial guy too).

Thanks.

With him being 10 years older, I'd totally take #2...it's the "certainty" number for you. The other 2 screw you over...

 

[afan]

Real world example - My mom and stepdad had life insurance for him that would pay off the mortgage, so it was going down as the amount owed went down via their payments. He worked somewhere that still had a pension and they had their investments. He set it up so my mom would get money each month if he was to die first. Not even a year and a half after he retired he was gone to lung cancer. Both in their mid 60's, my mom already retired. All their years of traveling etc, gone. The house is now paid off and she comfortably lives on SS and his pension, the IRA money she's required to get each month is the min she can take, gets saved, and eventually goes back to get reinvested.

Just because you would be comfortable without his pension now, doesn't mean that something doesn't happen later that would make that money more helpful. You could end up needing long term care or assisted living etc. I would never do option 1 unless I was a multi millionaire and really didn't need the money. I'd go for option 2 simply because you don't need that money now, but you very well could need it later. At the least I'd do option 3.

 

[DLgal]

Um, take #2. No contest. #3 is a close second.

I wouldn't even consider #1, to be honest.

How did he set up his military retirement? Did he elect the SBP coverage for you?

 

[tvguy]

#2- about $1000 less payout per month take home than #1, but I would get that amount forever. Even if my husband died. (I won't do this one)

Why won't you do this one? This to me is the only reasonable option. Mainly because I have know so many women who got into dire financial straits because their husbands took the maximum pension with no survivor's benefit and they outlived their spouses by decades (one friend of my MIL has been a widow for 25 years and spend all their savings within 5 years of his death)

But, a financial advisor is needed to look at your total picture.

 

[starry_solo]

I'd be SOL, but I'd buy a term life policy so not really.

yeah, you really need to be looking at option #2

 

[DLgal]

Also, don't just assume your husband is even insurable with term life insurance now, especially with his military history. If he is in his 60s, you'd be looking at premiums over $1000/month IF he even qualifies.

You need to be making this decision under the assumption that there will be NO life insurance option. This IS your life insurance on him.

 

[Miffy]

I'm for #2 as well. My sister's husband was 23 years older and he died not that long after retiring. She's very glad that he chose that option and has his pension to help her out.

Meanwhile, you are also eligible for Tricare, which is a gigantic plus for both of you. AFAIK, there is no better medical insurance.

 

[amylevan]

I think you need to price out the life insurance (for both options) before you can make any comparison. If it’s something you would need in order to meet the house payments for the next 9 years, it’s a non-negotiable part of the equation.

 

[MICKIMINI]

I'd go with #2. It's a scary road ahead with unknowns. The known is always better than the unknown.

 

[Erica Ladd]

I read your post and said immediately #2. Glad to see I’m not the only one!

 

[lovemygoofy]

You need to really think about long term play here. Instead of just focusing on how much money is short, sit down and do budget of all the monies and expenses.

My husband is retired from the military and elected to do survivor's benefits (your #2) because military men don't typically have that long lifespan as a spouse and it would take years and years to make up that $125 or whatever amount is taken out for me to recoup the amount should something happened to him.

Regarding life insurance, I'm not sure of your husband's age or how long he has been retired from the military but if less than 1 year and 120 days, your husband is eligible to purchase VGLI through his VA benefits but it's not cheap especially at the years increase. However, if there is any health problems and life insurance is purchased within this window, there is no health screening. From this website Veterans’ Group Life Insurance (VGLI) | Veterans Affairs (va.gov) it shows the price point for $250k life insurance for someone 60-64 as $260/month.

I would compare amount taken out of the check for survivor benefits to the amount of cost for life insurance for how long you would want to purchase it AND how long would you live off the payout of life insurance. The check is FOR THE REST OF YOUR LIFE. That is pretty good chunk of change especially if you lived even 15 years past him.

 

[Judique]

I'm for #2 as well. My sister's husband was 23 years older and he died not that long after retiring. She's very glad that he chose that option and has his pension to help her out.

Meanwhile, you are also eligible for Tricare, which is a gigantic plus for both of you. AFAIK, there is no better medical insurance.

having had military care and private insurance, I'm afraid I disagree with you.

 

[Judique]

You need to really think about long term play here. Instead of just focusing on how much money is short, sit down and do budget of all the monies and expenses.

My husband is retired from the military and elected to do survivor's benefits (your #2) because military men don't typically have that long lifespan as a spouse and it would take years and years to make up that $125 or whatever amount is taken out for me to recoup the amount should something happened to him.

Regarding life insurance, I'm not sure of your husband's age or how long he has been retired from the military but if less than 1 year and 120 days, your husband is eligible to purchase VGLI through his VA benefits but it's not cheap especially at the years increase. However, if there is any health problems and life insurance is purchased within this window, there is no health screening. From this website Veterans’ Group Life Insurance (VGLI) | Veterans Affairs (va.gov) it shows the price point for $250k life insurance for someone 60-64 as $260/month.

I would compare amount taken out of the check for survivor benefits to the amount of cost for life insurance for how long you would want to purchase it AND how long would you live off the payout of life insurance. The check is FOR THE REST OF YOUR LIFE. That is pretty good chunk of change especially if you lived even 15 years past him.

My guess is that if he is retiring from another job with a pension he is well past VGLI.

But @DLgal brought up a point. How was SBP handled? With SBP and option 2 plus your own retirement and possible social security (depending on where you work) you would be well set up if he were to unfortunately pass on.

 

[bdcp]

#2 definitely. My DH is currently still working but he retired as a 0-6 (US Navy reservist) after 30 years and started drawing at age 60. We took spousal survival with lower amount each month. We know a couple of people who decided not to do that after retiring from active duty thinking they'd make so much in their next career that it wouldn't be a big deal. The problem with that is, if the retiree gets hit by a bus the day after retirement, not one penny gets paid to the spouse. You're better off long term taking a lower amount and any good Financial Planner would tell you the same. A wife can easily outlive her husband by 10 years and in this case, probably more. In the long run, you would get more money with this choice than by taking the full amount. We also have tricare as our secondary insurance and will continue to after my DH retires. It's a fabulous supplemental plan to medicare (and our current private insurance).

 

[OrangeBirdGirl]

I'm also in a state pension system and one of our options is basically #1 but a guaranteed number of payments (either 5 or 10 years) incase they die right away. You sure nothing like that?

IDK I guess I'm in position #3. But, like you said, really in the hands of the financial advisor to make the recommendation. I think the financial advisor will be able to guide you if something happens to DH before the house is paid off how much of a burden it would be for you to come up with the extra for that. Such as would that mean you are not contributing less to your retirement to offset the house payment? Or would just other expenses decrease by only having you that it'd be manageable just in your regular take home. Even stuff like going down to one car if just you (even though you said paid off) you are only insuring and maintaining one car. Or utilities will decrease and groceries as well for just one person.