InsuranceSocial Security Strategies: Understanding Spousal Survivor Benefits

The Social Security eligibility rules are generally the same for everyone— but no one’s life, retirement goals, or financial needs are exactly the same. That’s why Pacific Life has created the Social Security Strategies series of brochures. Each brochure in the series focuses on a specific strategy to consider as you and your financial professional discuss how Social Security benefits fit into your overall plan for creating lifetime retirement income. Discuss with your financial professional everything you want out of retirement. Then, ask how to shape a sustainable retirement income strategy that’s right for you.

MAKING SOCIAL SECURITY WORK FOR YOU

 

PROTECT THE PERSON YOU LOVE MOST

You and your spouse are partners who depend on each other and have built a life together. So when you’re no longer there and your Social Security benefit payments stop coming, how will it impact your spouse’s lifestyle?

As a survivor benefit, when one spouse dies, the surviving spouse receives the larger of the couple’s two Social Security payments. But that still means the loss of one benefit payment.

Let’s look at a hypothetical example

A husband and his wife both receive Social Security benefits at age 66,1 which is full retirement age for both:

o While the husband is alive, they receive a combined monthly benefit of $3,000
[$2,000 (husband’s monthly benefit) + $1,000 (wife’s monthly benefit)].
o I f the husband dies first, his wife receives the higher amount of $2,000 per month as a survivor benefit.
o One-third of Social Security income is lost at the time of the husband’s death.

 

Strategies for Maintaining Your Income

You don’t need to experience a drop in income upon the death of a spouse. Two possible strategies to ensure the needed income is available are:

1. Savings/Investments—Build up your savings or investments before you retire, so the needed income can be withdrawn from these assets.
2. Immediate Annuity—Purchase an immediate annuity to generate supplemental income during retirement.


 

Did You Know?

 

A divorced spouse who was married for more than 10 years and has not remarried can draw against the ex-spouse’s work history. Widows and widowers can receive the higher of his or her own or the deceased spouse’s monthly payment, but not both.

 


 

THE SAVINGS/INVESTMENTS APPROACH

 

Before You Retire, Do Some Planning

  • You can use an income-and-expense worksheet to determine how much income you’ll need to replace each year if you no longer receive one of the Social Security benefit payments. Let’s say you would need to replace$650 per month:

$650 per month x 12 months = $7,800 per year

  • Next, think about the possibilities and decide how many years of replacement income you feel you may need. Let’s assume you decide on 15 years. Then, by doing some simple math, you determine the total amount you’ll need to withdraw from your savings over those years:

$7,800 per year x 15 years = $117,000 in total withdrawals

 

If you decide to take this approach, here are some questions you may want to consider:

o Can you save the entire amount needed?
o I f you choose to save through investments, how can you be sure that your investments will perform as expected?
o Even if you are successful at saving or investing, what if you need the extra income longer than 15 years? Will your source of income run out?


 

The Immediate Annuity Approach

 

Using an immediate annuity to supplement income is another strategy to consider. An immediate annuity is a financial product that provides you with immediate and steady income payments guaranteed to last your entire lifetime. The possible advantages of an immediate annuity include efficiency and guaranteed income for life.

It May Be More Efficient

It would take only $103,470 in an immediate annuity with a Life Only payment option to generate $7,800 in payments per year.1 Based on the calculation above, that’s $13,530 less than saving or investing may require.

Payments Are Guaranteed for Life

Once the annuity is purchased, the income payments are guaranteed for life. No matter how long your spouse lives, the income will never run out.

 


 

Pacific Life refers to Pacific Life Insurance Company and its affiliates, including Pacific Life & Annuity Company. Insurance products are issued by Pacific Life Insurance Company (Newport Beach, CA), in all states except New York and in New York by Pacific Life & Annuity Company. Product availability and features may vary by state. Each insurance company is solely responsible for the financial obligations accruing under the products it issues. Insurance product and rider guarantees, including optional benefits and any fixed subaccount crediting rates or annuity payout rates, are backed by the financial strength and claims-paying ability of the issuing insurance company and do not protect the value of the variable investment options. They are not backed by the independent third party from which this annuity is purchased, including the broker/dealer, by the insurance agency from which this annuity is purchased, or any affiliates of those entities, and none makes any representations or guarantees regarding the claims-paying ability of the issuing insurance company. Fixed annuities issued by Pacific Life are available through licensed, independent third parties.

Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL Financial affiliate, please note LPL Financial makes no representation with respect to such entity.
Not Bank/Credit Union Guaranteed | Not Bank/Credit Union Deposits or Obligations | May Lose Value | Not Insured by FDIC/NCUA or Any Other Government Agency

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Holly Farrar

Client Services Associate

As director of First Impressions, I strive to make sure our clients have a comfortable and meaningful experience while providing remarkable customer service at the highest standards. I enjoy going to local Everett events and festivities while spending time with friends and family. I love to read, especially dystopian novels.  I am involved in volunteering opportunities within the community including grocery shopping for homebound people, coffee trailer and first responder appreciation.

Education and Biography

Training

Holly Studied Business and Management at Sno-Isle Business and Management & Everett Community College. She has over 20 years of customer service and administrative experience.

Specialisms

Holly’s focus is to create meaningful connections between our clients and our office. She schedules appointments, answers calls, processes transactions, preparing paperwork to maintain accounts as well as opening new accounts, and transfers.

Albert Ballesteros

With over 25 years of customer service working in the Financial Industry and the State of Washington, Albert is a welcome addition to the service team. He helps with opening new accounts and servicing current accounts. You have probably received appointment reminders from him. He also works with the marketing team in planning monthly letters to clients, planning special events and creating the weekly newsletters.
In his spare time, he volunteers at Northshore Christian Church, having completed two mission trips to the Philippines and has a passion for singing. He enjoys playing and watching most sports but is especially an avid fan of the Everett Silvertips.

Education and Biography

TRAINING

Albert attended Honolulu Community College where he obtained his AA in Liberal Arts.

SPECIALISMS

Albert joined Bailey Wealth Services in 2022. His focus is to provide support to both prospective and existing customers with exceptional customer service. He is very personable and brings professionalism to his role.

Wes Burroughs

One of the things I enjoy most about what I do is educating clients on what is available to them as an investor. Our clients know where they’re at financially and where they are going because we make breaking down the complexities of a constantly changing world a top priority. Outside of work, I love spending time with my wife, Blyn, and playing with our daughter, Sophia. I also enjoy running and hosting game night with friends.

Education and Biography

TRAINING
Wes attended Liberty University where he obtained his BA in Philosophy.

SPECIALISMS
Wes joined Bailey Wealth Services in 2021. His focus is helping families maintain and grow the wealth they already have. Wes enjoys working with our valued clients to facilitate financial relationships by providing solutions, solving problems, and helping them manage their financial lives.

A. Sean Bailey, CFP®

My mission is to assist families as they strive to acquire, accumulate and retain wealth in a tax efficient manner so they may live in retirement with confidence and dignity. When I’m not engaged in professional activities, you can find me on a mountain top with my wife, Kim, and our two children, Eleanor and Oscar.

Education and Biography

TRAINING
Sean received his Bachelor’s Degree in Business Administration, Finance Concentration, from the University of Washington.

SPECIALISMS
Sean Bailey has been in the financial services industry for 30 years. He specializes in developing comprehensive financial, estate and retirement planning strategies for clients nearing and in retirement. Sean is a Registered Principal and Investment Advisor with LPL Financial. He is a CERTIFIED FINANCIAL PLANNER™ Practitioner. Sean is also a member of the Financial Planning Association and Ed Slott’s Elite IRA Advisor Group.

Ed Slott’s Elite IRA Advisor Group is not affiliated with Bailey Wealth Services or LPL Financial.

Sonya Jones

I endeavor to provide excellent service to our clients and organizing processes and procedures to ensure our office runs smoothly. When not working, I enjoy spending time with my fiancé, Erik, and our two boys, Lukas and Archer along with our dog Pixie. I love cooking for them and experimenting with different recipes and techniques, including treats for Pixie. Our favorite family activity is taking road trips, especially to California to visit family and friends.

Education and Biography

TRAINING

 

Sonya received her BA in Art at California State University, Chico and has over 25 years of administrative and customer service experience in the financial services and accounting industries.

 

SPECIALISMS

 

Sonya’s focus is to help clients reach their financial goals by assisting them with their various transactions and paperwork to service and maintain their accounts. This includes opening new accounts and initiating transfers from and to financial institutions. Sonya is constantly looking for new ways to improve our processes to ensure we work efficiently and in a manner that creatives positive experiences for our clients.

Sonya Jones

I endeavor to provide excellent service to our clients and organizing processes and procedures to ensure our office runs smoothly. When not working, I enjoy spending time with my fiancé, Erik, and our two boys, Lukas and Archer along with our dog Pixie. I love cooking for them and experimenting with different recipes and techniques, including treats for Pixie. Our favorite family activity is taking road trips, especially to California to visit family and friends.

Education and Biography

TRAINING
Sonya received her BA in Art at California State University, Chico and has over 25 years of administrative and customer service experience in the financial services and accounting industries.

SPECIALISMS
Sonya’s focus is to help clients reach their financial goals by assisting them with their various transactions and paperwork to service and maintain their accounts. This includes opening new accounts and initiating transfers from and to financial institutions. Sonya is constantly looking for new ways to improve our processes to ensure we work efficiently and in a manner that creatives positive experiences for our clients.