Social Security Survivor Benefits

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Sit back, enjoy it, share it, but most of all, thank you for listening and choosing the Truth Podcast Network. Care, IRAs, long-term care, life insurance, investments, and taxes. Now, let's get started with Finishing Well. Finishing Well is a general discussion and education of the issues facing retirees. CardinalGuide.com, Cardinal Advisors, and Hans Shile CFP sell insurance. This show does not offer investment products or investment advice. Welcome to Finishing Well with certified financial planner, Hans Shile, and today's show is the Social Security Survivor Benefits, which is a mouthful.

You're going, oh, wow, I get to hear that. Well, there really is some really helpful information in this show. I know that for me personally, it's significant.

And the reason it's significant is that all our lives, you know, we leave a footprint. And years ago, I picked up a book. It was called The Shepherd's Guide to the 23rd Psalm. And I hope you've had a chance to study the 23rd Psalm at some point in time in your life. But the last couple of verses, it says, surely goodness and mercy will follow me all the days of my life, and I will dwell in the house of the Lord forever. Well, that's somewhat conditional on the first line of the 23rd Psalm, which is the Lord is my shepherd, right? And if He's your shepherd, then the resulting action of the sheep will cause this to happen. And here's how a shepherd looked at that in this wonderful book.

It's called The Shepherd's Guide to the 23rd Psalm. He said that sheep are the animals with the golden hooves. And if they're shepherded properly, they will take a pasture that's just essentially dead and brown and turn it into a bright green lush pasture based on the way that they feed on the grass, the length of the grass they leave it, and their manure, et cetera. The way that they treat a field, you can tell where the sheep have been. And so when you look, there's a beautiful passage in the first chapter of the Song of Solomon where the lover of Jesus is looking for him. So the shepherds tell her, you know, that in order to find the sheep, you just gotta follow the tracks.

Well, there's the idea. If goodness and mercy, you see, if you live your life under the shepherd, you leave a footprint, right? And that footprint is goodness and mercy.

And so when we're talking about survivor benefits, right, we're gonna be talking about those financially, but I don't want anybody to miss that your life leaves a spiritual footprint, right? And one of the heroes of today's show is actually Benjamin. We're gonna be talking a lot about him. But Hans, he left a real imprint even in your own life.

He absolutely did. He was a dear friend and he just passed away about two weeks ago. And, you know, at the same time, I'm very sad. I had the privilege of going over and meeting with his wife and widow, Daphne, who's also a very dear friend of mine. And we were overcome with this just deep sorrow where we just miss Levi and we miss him greatly.

And we have joy where we were just seeing a whole plan coming together. I mean, this was the day that he was concerned about for the whole time I've known him. So I met him in church where I was making a presentation to his church of all the elder people in the church and talking about the things I talk about and help people with.

And he waited till the whole crowd afterward to come up and ask him questions till the end. And he came up to me and he says, you know, I've got this problem that I'd like you to help me with. He said, I just built a house for my retirement. I've got a 30-year mortgage on it.

It's all on one level. I'm six or seven years older than my wife. And I'm just real concerned that after I die, she's going to have trouble making the house payments.

And so I want to do something about that. He said, she is also not going to get any survivor benefits on my military pensions. And he says, I'm really making the house payments with the military pensions. You've got two of them, one for disability and one for his service.

So he'd been saving the gist of it. And then he had about $30,000 put together. And what he thought I could help him with was investing this money in such a way that there'd be significant money for her when the day comes that he's gone.

So I just listened to him and I told him, I said, you know, it sounds to me like more than an investment plan. You need life insurance. And then he just real quickly said, I can't get life insurance. I've got health problems.

And so we kept talking and going on. And then I just kind of jokingly told him, I said, you know, it just seems kind of odd to me that you're the one telling me that you can't get life insurance when I'm the life insurance guy. And so I said, how about you turn that business into a question? So I literally made him ask me, can I get life insurance? And I told him, maybe.

I think there's a good possibility we can find, I got 100 companies. And, you know, I know the ones that specifically work well with people in their seventies. And so to get to the end of the thing, he ended up buying a pretty substantial life insurance policy that was very expensive. I mean, he's got a pacemaker or he had a pacemaker and then he also has type two diabetes, but managed very well. This guy was in shape.

He's a former military officer, retired military officer. I mean, he, so that's kind of how my business relationship started. He got me involved in my people that work for me, involved in the food bank. He was very much involved in that, kind of ran the whole program at his church. And we're over there once a month distributing food. There are several times when people would come into money within their community where they'd go over and see Daphne and Benjamin. I mean, they'd go over there, see them, and then he'd bring them there at an appointed time.

And then I'd come over and help them. And he just said, I know this guy, and the guy was me. So that's kind of the nature of the relationship. And I want to tie all this into social security, but I'm still very emotional about the loss of him as a friend. And then I'm also very joyful of just the privilege of being the life insurance guy that shows up after the death and to be able to sit with the family and make this plan we've been working on for years come to pass. Darrell Bock Yeah, you can certainly see the footprint that he's made in your life.

Because, you know, I've heard you actually speak to him about him many times, Hans. And so it's cool, you know, how these people leave a footprint of goodness and mercy. And certainly he's left that in so many ways for his family now. And, you know, one of the ways he did that is by understanding that, you know, social security, lose a check, and the pension, you know, all those things were a mathematical situation that, you know, a spouse has to take into account. James Woolsey Well, I mean, I've got the numbers right in front of me that his social security check was 1,450 a month. Daphne's check is 1,100 a month. His pension from the state of North Carolina, 775 bucks a month. Her pension from the state of North Carolina, 1,052 a month. His military pension, number one, 2,500 bucks a month.

His disability pension, which I think was for Agent Orange from Vietnam, 2,000 a month. So these folks had 8877 rolling in a month. And they didn't live high on the hog.

I mean, they just didn't. But they had nice things. And they had two nice cars and, you know, this home all on one level that they had built. And they helped the kids out and grandkids and did a number of things. But as soon as he passed away, what happened is, her $1,100 social security check goes away and she gets his. So you could say that's a benefit. A survivor benefit is 1,450 a month. But it looks to me like the removal of a benefit because her 1,100 bucks is gone. And then his $775 pension cuts in half. She still gets hers of 1,052 a month. And she gets nothing out of either one of these military pensions. Now, we're hoping that there's some type of widow benefit because he married her after he retired from the military.

So, I mean, they went together from 8877 a month down to 2,890 a month. Now, praise the Lord, they've got $220,000 of life insurance that's coming to her. And then there's another $100,000 annuity that's getting divided up between her kids and his kids. So there's another piece of the footprint that he took care of.

Darrell Bock Right. And the thing to think about, clearly, especially for those of us who, like me, where my wife is almost 10 years younger than I am, that, wow, I mean, what happens, especially in my case where I'm still working, so you lose that income. And then, you know, my Social Security, you know, when she becomes eligible for that, you know, how does she take it?

If she takes it early, then she pays a penalty for the rest of her life. So all those things are a big part of this show today of just talking about, you know, let's consider what happens when one spouse goes to be with the Lord. That's the planning issue for people in their 50s and their 60s, is to prepare if one of you goes early or midterm, and one of you lives a long time, for many years, which very, very well may happen with him. He was already on top of this before he met me. He was worried about it.

He didn't quite know what to do about it. But you folks need to be looking at what kind of shape is my spouse going to be in, money-wise and income-wise, when I'm gone? I mean, it's just that simple. And, you know, I can help you do that. And we can dig into this a little deeper when we come back at the second part of the hour or the half hour, where we can go through the numbers on this, and then we can talk a little bit about the life insurance that he put in place. And it was expensive at 77, but he still did it.

And it paid off like a slot machine, obviously, a lot better than if he'd put his money in some investment. So, you know, obviously all these topics that we're talking about today are Hans' book, The Complete Cardinal Guide to Planning for and Living in Retirement, which is available at CardinalGuide.com is where our sponsor is. And clearly you can find all that information on Hans, as well as email him and ask him for the book. But also, he's got these YouTube videos. So there's a YouTube video that lines up with today's episode that's at Cardinal Advisors, different word, still Cardinal being the first one, but the Cardinal Advisors on YouTube. And believe me, they got lots of other content as well as podcasts of all the previous shows. And all these different topics are all there at CardinalGuide.com as far as the internet and Cardinal Advisors as far as YouTube.

So we'll be right back with a whole lot more Survivor Benefits. Follow the tracks of the sheet. Hans and I would love to take our show on the road to your church, Sunday school, Christian or civic room. Here's a chance for you to advance the kingdom through financial resources by leveraging Hans' expertise in qualified charitable contributions, veterans aid and attendance, IRAs, Social Security, Medicare, and long-term care. Just go to CardinalGuide.com and contact Hans to schedule a live recording of Finishing Well at your church, Sunday school, Christian or civic group. Contact Hans at CardinalGuide.com.

That's CardinalGuide.com. Welcome back to Finishing Well with Certified Financial Planner, Hans Scheil, and today's show is Social Security Survivor Benefits. And we've been talking about the footprint your life leaves and the footprint that Benjamin left Hans' friend.

So why don't you pick us up there? Yeah. His plan for the $100,000 of life insurance was on top of the $120,000 that he already had. And that was spread over five policies. And his plan for this $100,000 was to pay off the mortgage. And we're short about 50 grand on that. And immediately she was wanting to talk about that. And I said, well, I don't think we're going to pay off the mortgage.

And here's why. Is there's like 23 years left on the mortgage. And she's 77. So she's going to need to live to $100,000 before, you know, making payments, she's going to need to live to $100,000. So in other words, if she passes away at $90,000, there's still going to be a mortgage in the house. And she's only going to have to have made the payments for 13 years. So I think we're better off making the payments out of the pool of 220 grand, at least for the short term. And just incidentally, that $100,000 of life insurance will make 77 payments of $1,300 a month. So that'll at least get her out six and a half years, plus it'll earn a little interest.

So when we're just isolating that, so the deal is, it's not always smart with a life insurance settlement to pay off a mortgage, because you might be better off just having the money over on your side of the equation and just continuing to make the payment out of the money. But, you know, she's going to be fine, because he's got 220,000 of life insurance. And then in addition, they have about $50,000 to $60,000 to $70,000 of just money that have come from different things. So between 270 grand and they still do have income of $28,90 a month, or she does, she's going to be fine.

So that's a good piece of the story. And I wanted to mention also that he'd talked to me since the beginning that he inherited his mother's house, which he didn't think was worth much. I think he told me about $50,000, $60,000 is what he told me, maybe a guess of $70,000. And along a couple of years ago, this isn't too far from downtown Raleigh, people are coming around wanting to buy that house. And I just, my advice to Benjamin was that what we're going to do with these people that are wanting to buy the house or make an offer on the house is I want a written offer from them that I can look at. And so he thought that was real good advice, and I want numbers on it. And whether they're paying cash or somebody else. So he goes and does all that.

I never met with these people. And it came out that it was pretty sweet. And then as soon as he got the written offer, now he's worried about the taxes.

And how much taxes am I going to have to pay? So we did another little bit of work. We had to do it quickly, because now we've got an offer on the table. And we were able to finagle things with a step up in basis from his mother's passing years ago, and blah, blah, blah, blah, blah, that we ended up paying no tax on this. Like, his net out of the whole thing was about 170 grand out of this house that he only thought was worth $50,000 or $60,000.

But somebody thinks it's worth more than that. So he gets 170 grand. And then once he gets the money, he used about 70 grand to do some things for them and pay off a little debt and buy himself a car. And then what he told me is he wanted to leave $100,000 to his children, because he was thinking he was going to hold the house.

He has two children, and then she has two children that are his stepchildren. But he wanted to leave some money to all four of them. And this was the perfect money, is the residual $100,000. So what we did is we put it into an annuity, not thinking we were going to get rich off the interest in the annuity, but taking advantage of the avoiding probate as we just named beneficiaries on the annuities. And I took care of that the other day with him to fill out all the paperwork.

He asked for my advice on that. And because he said he wanted to leave more to his kids because it was their grandmother's house. But it was also the step kids, step grandmother. So we came up with 35% to each of his kids, 15% to his two step kids, and that equals 100%. And so now they're all getting an inheritance, a cash inheritance, coming quickly to all four kids. And you know, it's just more pieces of the footprint, you know, that I helped him do, but he's the one that did this.

It's just remarkable. Somebody with fairly limited assets was able to really take care of everybody in the family, including his surviving wife and widow. And what we want to do on the show today is really, is all of this is relevant from a planning standpoint, from people in their forties, fifties, sixties, seventies. I mean, we're all covered by social security. And if you're married, you've got to think about if one of you passes soon or sometime in your sixties or seventies, and the other one lives into their eighties or nineties, you've got to really look at what the income is going to be and what the lifestyle is going to be for the surviving spouse.

Yeah. And for, you know, as you, as you bring that up, I, I I'm so glad that we've done these shows because, you know, the widow benefit is available for people when they're 60. But you, when you do that, you reduce your benefit for the rest of your life to like 71% of what it would be at full retirement age.

So, you know, it's a really good idea to take a look at this and discuss it with your spouse. Like, you know, my case, Tammy, don't, you know, hold off the reason I bought this life insurance. The reason why I did certain things is for goodness sakes, wait till your full retirement age. Cause I don't want you to limit your income based on thinking that you'll go ahead and get social security since you qualify as a widow.

Right? That's exactly right. And you need to think about the gap, but then you also need to think about if she's a survivor, then that's all she's going to have is that one of two checks because her checks going to go away when she gets your check. Then you got to think about everything else. And that's where, where life insurance is just a miracle product. And, you know, it makes me sad when people get on, consumer people start trashing life insurance, like it's some kind of a ripoff or something and life insurance for older people. And talking about cash value, life insurance is really people that don't understand it. And when you can really watch this in action, when the life insurance pays off in a situation, just like you described, if you were to go on and pass on early and then Tammy is going to need to wait to file for social security and then she should live off the life insurance.

And then, but once she gets the social security at the higher amount, she's still going to need some life insurance money to supplement that, to go on for the rest of her life. Oh, there's no doubt. It's kind of really a godsend from my perspective that, you know, I started doing this show because it really, it kind of, you know, I call you the goad quite often like, yeah, you need to be thinking about this stuff Robbie.

And, you know, I want to leave a footprint that my family goes, yeah, he took care of his wife, he took care of his kids, but he, you know, also took care of the church and all those different things. It's really an opportunity to think through and understand all that stuff that really at socialsecurity.gov is a wealth of information that really everybody should go on that website and check out there because it shows you all the benefits. Well, it does. And then the next thing you need to be thinking about is most people don't have pensions anymore, like Benjamin and Daphne had here. They have, and that's a benefit that comes to them. And it's only one social security check, but what people have in its place is 401ks, IRAs, and the beauty of those, especially if you haven't started drawing on them yet, is the survivor benefit is the cash value. And then what I'll tell you is, too often people say, oh, that's my life insurance. I'm all, you know, she'll be all set or he'll be all set when he just inherits that. Well, not so fast, because we need to scenario all this and look at distributions and taxes and all kinds of things. And that's what we do in retirement planning and financial planning is just look at different scenarios and have you start preparing and saving and paying premiums on life insurance and doing all those things in the pre-retirement. And even in the early retirement, we have people paying for things, preparing for late retirement for either or both of you.

Yeah. So you can see that's a mouthful, you know, but it's really, as you begin to see that, wow, from my standpoint, you know, I can actually feel really good that I can completely right this minute, not only see how Tammy will be taken care of, but I've had those conversations and even gotten the paperwork in place with your help, actually Hans, for all those things that you say we got to have. Well, those are all the legal documents done by an attorney. And we have, you know, an attorney who works at very reasonable prices. And then she's guided by me in the sense that she doesn't start selling people all kinds of fancy stuff like trust that they probably don't need. They really didn't cost you much to get all that stuff done for you and Tammy and make that offer to people really around the country.

Cause I'll find you somebody like her if you're in a different state, but if you're in North Carolina, it's very simple to use the attorney that is in my office and she'll work over the phone and zoom and all that kind of thing. And, and worse, Daphne and Benjamin used her. And so all the documents are right there. That part of it is just a piece of cake.

And that's huge. I can imagine for Daphne right this minute, because to have the power of attorney to have the will all that stuff, you know, my dad had it as well. And, and so it was really nice to be familiar with it at the moment when you really need it.

Sure, sure. It is just gratifying for me to be sitting down, you know, I'm very sad when I've lost a friend and a client. It's gratifying to me to just sit down with people and see all this stuff work like it's supposed to work. And I can just tell in her voice, she's very comforted by that. She wasn't even that worried when she called me because she knew he had left this footprint. And, you know, aided by me and part of the footprint was he left me behind.

And she also knows that I'm backed up. I mean, Tom is still 29 years old. So when I'm gone, and somebody's got to sit down with your spouse or Tammy, Tom's going to be right there. So, God willing. Yeah. And that's all, you know, part of, you know, why Hans is the goad, right? He's, you know, that passage where in the Bible where it says, why do you kick against the goads?

Well, you know, it's there to keep reminding us that we got to be thinking about these things. Even if you're younger, like what does happen if all of a sudden, you know, these things happen, and all those planning, it's right there in Hans' book, The Complete Cardinal Guide to Planning for and Living and Finishing Will, actually, in retirement. It's there at cardinalguide.com.

And I'll mention again that he's got these wonderful YouTube videos that line up so well with what we've talked about today. It's there at Cardinal Advisors on YouTube. Again, Cardinal Advisors is the YouTube and, you know, now I forgot the cardinal guide.

Cardinalguide.com. It shows that my memory, you know, I'm getting old. I better be doing some planning. No problem. No problem.

This is not scripted, this show. Thanks Hans. As always, I love this.

I love doing this. Finishing Will is a general discussion and education of the issues facing retirees. Cardinalguide.com, Cardinal Advisors, and Hans Shile, CFP, sell insurance.

This show does not offer investment products or investment advice. We hope you enjoyed Finishing Will, brought to you by cardinalguide.com. Visit cardinalguide.com for free downloads of this show or previous shows on topics such as social security, Medicare, IRAs, long-term care, life insurance, investments, and taxes, as well as Hans' best-selling book, The Complete Cardinal Guide to Planning for and Living in Retirement, and the workbook. Once again, for dozens of free resources, past shows, or to get Hans' book, go to cardinalguide.com. If you have a question, comment, or suggestion for future shows, click on The Finishing Will radio show on the website and send us a word. Once again, that's cardinalguide.com. Cardinalguide.com. This is the Truth Network.