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Social Security Survivor's Benefits — Important Benefits for Surviving Spouse - YouTube
Channel: Cardinal Advisors
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9.7 Survivor’s Benefits
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So today's Cardinal Lesson, we're going
to be talking about Social Security:
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the Spouse Survivor. Or what
does the Spouse emerge with,
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with the two Social Security checks? And
we're going to be doing a little case study.
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A very dear friend of mine and a client,
I just found out day before yesterday,
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passed away. And he's in my book, she's in my
book. This couple, and I changed their names
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of course when I put them in the book, because
they're ‘Benjamin’ and ‘Daphne.’ Their their
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real names are actually different, I don't like
to go talking about my clients to the world,
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but the reason we're talking about them today,
is it just puts things into perspective for me.
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When I have the Spouse of a client,
and I don't think she's ever called me
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herself before, and my assistant says, ‘You just
got a call from you know and Daphne so and so,’
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and I just thought that's a little odd.
Because normally it'd be him calling me,
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and most of the time he called me on my cell
phone, but anyhow I called her up. She told me
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what happened and she wanted to see me as quickly
as possible. I went out to her home this morning
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and what we were really doing this morning, was
that he had six different Life Insurance policies.
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Most of them for smaller amounts, and then
included in the six, was the $100,000 dollar
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policy that I sold him seven years ago. And she
needed help just figuring out what these things
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are, who to call, what to fill out, what
she needed to do. So we got started on that
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and then she also wanted help with
financial planning. Like what, you know,
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what’s she gonna do, and going forward? And I
said ‘Let's just let's take a timeout here. You're
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gonna be alright and let's just plan for the next
couple months. This is how we're gonna operate.’
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And then it shouldn't take us but a couple of
months to get paid off from the Life Insurance
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companies. Then we'll sit down afterward, after
the two months, and then we'll plan out you
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living as a widow and living alone for a number
of years. And so, you know it's very, I guess,
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gratifying in my job- it's it's really sad
work when a friend has just passed away, but
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it gave me a sense of like, really meaning and
purpose. And I can tell you that I was one of
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the most welcome visitors in that house. I could
just feel it when I walked in, ‘Here comes the
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the Life Insurance guy.’ And, uh, you know we we
need to talk to him. So the topic today is, I talk
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about this all the time, and in the simplest form,
is when you have a married couple and they're on
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Social Security: They got two checks coming into
the household. And for Benjamin and Daphne, this
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is $1,450 a month and $1,100 a month. So in June,
they were, they received from Social Security
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$2,550 and had been for quite a while, along
with some other things that they have for income.
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And when the first Spouse passes away, which in
this case it was Benjamin, what happens is is
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Daphne as the survivor she gets his check for the
rest of her life. So she gets the larger check.
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That's the good news, the bad news is her check
stops or goes away. Now if he had died first,
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excuse me if she had died first, and then he was
a survivor, then her check would just go away.
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I mean he would just keep getting his
check, because it was the larger check. So
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no matter the order that people pass, the smaller
check goes away. So in financial planning,
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for you people that are in your 60s and 50s,
where you're planning Social Security decisions,
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and you're married and you're going to have
two Social Security checks coming in the house,
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just so you'll know, when the
first one of you passes away
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the smaller check goes away. And so that's,
I've had that on several other videos,
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and I just thought today to look at a real
life case that I'm just living right now,
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and in Daphne's case: she's going to live on with
what is the larger check with this one missing.
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Now to add a little bit of context as we sat
down this morning, and we said okay, so he has
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a pension from working for the state. Uh, it's
$775 a month she's going to get half of that. So
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her- instead of the $775 coming into the
house- it's going to be about $380 something.
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And then she has a pension, she also worked
for the state and she gets $1,052 a month.
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So what she's going to be left with,
ignoring the military pensions, is
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$2,890 a month. That's $1,450 collecting his
Social Security check, half of his pension,
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and then her pension. Which of course she's
been getting, and she'll continue to get.
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So she's got $2,890- What they had been living
off of was the larger amount of his pension,
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two Social Security checks, and then he actually
had two military pensions. And I just took
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him at his word when I met him seven or eight
years ago. I didn't really research the facts,
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I'm hoping and praying that she's going to get
some type of survivor benefit out of this military
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pension. At least the first one, but I I also have
to take him at his word what he told me is both
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of these stop when he passes away, which he just
did. So what we're looking at here is a situation
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where almost $9,000 a month has been coming into
the household, and that now for the survivor is
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going to be just a little under $3,000 a month. If
we're not able to get anything out of the military
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pensions- and what this couple was doing really
since they retired is he had been saving a good
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bit of these military pensions knowing that she
doesn't have a survivor benefit and they bought a
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a new home. And they built it all on one level.
It's a small home, but very nice. I was just there
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this morning. And they did that about 10 years
ago, and so they were a couple of years into
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the home and I was speaking at his church with an
AARP function. Where, I was speaking to the whole
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crowd about finances, about money, about managing
your money as a senior, and he came up to me at
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the end of the thing. And he said you know I've
got explained a little bit about the situation
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and he said ‘I've got $25,000 in this Savings
Account that I've saved so far I'm adding to it
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what can I invest that in so that my wife will
have something built up when I pass away.’
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And I sat there and listened. I asked a few
more questions and what I told him, I said
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you know it sounds to me like you need Life
Insurance. And then he just very quickly said ‘Oh,
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I can't qualify for Life Insurance. I've got
um a pacemaker, and I've got type 2 Diabetes,
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and I'm 77 years old.’ I mean you put all those
things together- he just very emphatically went
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through- that can't get it and so I sat and
listened. I said well you know it's interesting
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I've been in the Life Insurance business- at that
time for 30 some years- and I said that you're the
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one telling me you can't get Life Insurance. I
said how about you turn that into a question,
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and so I literally got him to ask me, ‘Well can
I get Life Insurance?’ And I said, well maybe,
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and I said I can do some work. I represent over
a hundred insurance companies and specialize in
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the Life Insurance business. And people look at
Life Insurance, these Life Insurance companies,
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and the Underwriting look at seniors or people
in their 60s and 70s much different than they
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did 20 or 30 years ago. His modern treatments
and care- you just have a lot of people that
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20, 30 years ago you would have said this
guy isn't going to make it but a few years.
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Whereas now people can have heart disease and
have a pacemaker and they can live into their 90s.
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Anyhow, so we went, I went back and I did some
homework, I said you know you got quite a bit of
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money to deal with that you're saving here. So
one of the ways to deal with this, is if we can
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get you some Life Insurance, is to start paying
a big premium into a policy and that way you'll
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know it's there. So what we were able to do is
the, at the time, at 77 years old, the premium
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for a $100,000 worth of Life Insurance was about
$5,000 a year. A little over $5,000 a year at
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Standard Rates, but I knew he wasn't going to get
Standard Rates. So when I talked to the company,
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it became $7,200 a year, you know and we're
looking at that, but it still, that sounded all
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right to him. Because, he said you know I could
put in $7,200 and I could live two or three years
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and I got $20,000 into this, and Daphne's
gonna get $100,000 to work on the mortgage, so
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let's go for it. Well then when the policy came
back, it was over $9,000 because I didn't really
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understand the full extent of the
pacemaker, and um the Diabetes, and I...
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but it was just amazing the insurance company took
him and they just put an extra charge on there for
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five years. But the $9,000 became $7,200 five
years later, which was three or four years ago,
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and anyhow he sunk a good bit of money
into this. But he just passed away and
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you know it's a real blessing that he's
got this coverage. And I just sat with her,
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we filled out all the papers, and we're waiting on
the certified death certificates. She's going to
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get $100,000 just straight up from the insurance
company. And you say, well okay so that's nice,
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is that going to solve a problem? Well all by
itself... not really, because if we just make the
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payments, the house payments are $1,300 a month.
And they were paying that out of this, it's going
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to be kind of hard to pay it out of this. And
still have a living and existence beyond that.
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If we just pay the $1,300 a month out of the
$100,000 she's got 77 months to make payments-
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which is like six and a half years, maybe if we
earn a little interest and some gain on that. I
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mean maybe we could make it 80 or 81 months, but
there's a finite time and I don't want a person,
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a client of mine, sitting there at 78 saying
well I got to move out of the house. And
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you know six years, seven years, eight
years, because that's not really the
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situation because he has another $110,000 of
Life Insurance that he had when I called him,
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that he bought years ago. It's just some policy
stacked up, so she's gonna have that money, plus
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another $110,000 or $120,000 and then she's got
$50,000 right now you know in their savings. So
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she's going to finish with, in my proposal, was
let's let's just put the whole $270,000 in your
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Checking Account or a Money Market Account.
Let's get all the Life Insurance paid off,
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and then let's just sit here, pay for the funeral,
pay for some other expenses. They got a small loan
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and let's sit down and see what we
got, and then let's let's take this
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and this and it'll total this and then let's
go to work on these. I'm pretty sure that
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the military disability pension, which I
think he was in Vietnam for quite a while,
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I think that was a compensation for Agent Orange.
And I do think that that stops at his death, but
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I'm hoping and praying that she's going to get
some benefit out of this. So anyhow my plan for
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her and once I laid all this out she's going to
be all right. She's got a little over a $250,000
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cash that she's going to be sitting with at 78.
This kind of income- she's got a mortgage of like
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$167,000- but then we can just sit down and we're
gonna put everything to zero and just plan it out
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from there. So what I want you to learn from this,
is really is is that if you're a married couple
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and you're planning for your retirement and you're
in your 60s and you're deciding on your Social
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Security, just know that's going to be two checks.
And if you both make it into your late 80s and
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90s, well then this isn't really a consideration,
but if one of you goes first and then the other
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one lives on for a long time this type of problem
could be in front of you. And so we really need
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to plan for that and you don't know which one's
going to go, but it's just, the Social Security
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income is going to go way down. So I'm Hans
Scheil and I thank you very much for listening.
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