Income goes down (lost pension and SS) but taxes can go up since you're now using the single brackets. The life expectancy gap is 6 years, plus I'm 3 years older than my spouse so that could be 9 years. Her family also has better longevity so we could easily die 15+ years apart.This was a revelation to me. I'm guessing it is NOT much of a revelation to veteran Bogleheads, but I hope it helps someone with their planning.
I was playing with various scenarios in NewRetirement, and I was really caught off guard by the impact of the timing of the deaths of spouses on adequacy of our portfolio. My wife and I can both live to 100, and we're just fine. Or 82. Or 85. But if one of us lives a LOT longer than the other, it really changes things for the worse. I've done some digging in the archives of this group, and have found several threads in which people mention that expenses don't necessarily go down when they lose a spouse-- but income definitely goes down, especially for people who are including social security as a significant source of income in retirement. This timing has a much bigger impact on "success" than most of the changes in rates of return, asset allocation and retirement dates that I've been so focused on previously.
So if you're like me and haven't previously considered that parameter, it bears looking into. If your spouse outlives you (or vice versa), your target number might increase-- or at least you should both be aware that major changes will be needed on the expense side. My dad died almost 40 years before my mom, so this hits close to home. We also know several widows who lost spouses more than a decade ago. A source I found says that non-Hispanic white widows outlive their husbands by 12.5 years. Other groups had an even greater average duration.
Statistics: Posted by White Coat Investor — Fri Aug 16, 2024 1:23 pm — Replies 12 — Views 677