A financial plan may be impacted in a variety of ways upon the loss of a spouse.
If you would like to evaluate the impact of losing a spouse in My Plan, the first step is to create a new scenario. Then, you may enter a shortened longevity date for one spouse. After that, adjust other relevant items.
These are a few of the items you may want to take into consideration and how they are handled by the Boldin Planner.
Longevity Age: Forecasts run through December in the year that the longevity age is reached for both the primary user and partner.
Income: Income streams from work, pensions or annuities for a spouse will end at the spouse's longevity date if there is no survivor benefit.
Savings: At the spouse's longevity date, accounts will become the assets of the surviving spouse and subject to the appropriate RMD tables for the surviving spouse.
Recurring Expenses: Medicare and long-term care expenses will adjust automatically at the longevity date of the first spouse to pass. No other changes to expenses are modeled by default at the longevity age of one spouse. Although each plan is different, you may wish to modify expenses at the spouse's longevity date. For example, the loss of a spouse may bring on a need for home maintenance or personal care otherwise provided by the spouse. Or, the loss of a spouse may entail a reduction in travel and entertainment expenses.
Home and Real Estate: No changes are modeled by default at the longevity age of one spouse. You have the ability to model a variety of real estate changes in My Plan such as relocation to a smaller residence or retirement community after the loss of a spouse.
Social Security At the first spouse's longevity date, the Planner automatically switches the surviving spouse to the greater of their own benefit or the deceased spouse's benefit.
This automatic adjustment is accurate when the surviving spouse has reached their survivor Full Retirement Age (FRA) at the time of the first death. It does not account for:
Eligibility age: Survivor benefits generally can't begin before age 60 (age 50 if disabled, or any age if caring for the deceased's child under 16).
Early-claiming reductions: Survivor benefits claimed before survivor FRA are permanently reduced, to as low as 71.5% at age 60.
Claiming strategy: A survivor can claim one benefit first and switch to the other later, such as their own reduced benefit at 62 and the full survivor benefit at FRA.
If the surviving spouse will be younger than their survivor FRA when the first spouse passes, the automatic adjustment will overstate income. Use the steps in [Social Security Survivor's Benefits for Widows and Widowers] to model the benefit accurately.
IRMAA: The Planner will use the MAGI for the survivor in calculating IRMAA taxes in the first year in which their spouse has been deceased for the entire year.
Taxes: The Planner will use the AGI for the surviving spouse in calculating income taxes in the first year in which their spouse has been deceased for the entire year.
Life Insurance: You may wish to enter the death benefit of any relevant life insurance policies in My Plan > Income > Windfalls at the longevity date of the spouse with the first longevity date.
Still have questions?
Survivorship planning can be complex. For more help:
Ask Boldin AI.
Use Support Chat by clicking your initials in the upper right corner of your plan.
Consider a coaching session or a Boldin Advisors engagement.