I'm worth more dead than alive

[sol]

...and I hope you are too.

My spouse and I have approximately equal retirement savings.  In the case of most of our assets, the transfer to the beneficiary is fairly straightforward if one spouse dies.  But it turns out we have some assets that only exist in the event one of us dies.

In our case, our employer Uncle Sam offers a death benefit to any employee who dies for any reason while still working.  It's a one time cash payment of 50% of your salary plus about $30k.  In addition to that payment, our future pensions, for which we are not yet eligible, would kick in immediately at 50% of currently accrued pension amount paid to the survivor, paid out monthly just as if we had retired on the day of our death and elected a non-reduced survivor annuity, but without any early retirement penalty.  Score!

In addition to those two payments, we also have basic group life insurance through work, with the employer paying the majority of the premiums.  The one time payment is a little bit more than your annual salary if you die past age 45.  If I die tomorrow at age 38, it's 1.7 time my annual salary.

All together, this means I if I die right now my wife collects not only the existing value of all of my investment accounts, but also up-front cash payments equal to 2.2 times my annual salary plus $30k, plus 50% of my accrued pension per year for the remainder of her life.  Forget 50% savings rates, she could do one year of better than 200% savings rate.

All three of those benefits are only available to current employees.  If we retire early we lose them. 

One of them (the survivorship annuity) is back on the table as an option if we both live long enough to reach traditional retirement age and start drawing pensions.  But in between?  In between early retirement day and pension day there are potentially 24 years in which we lose out on hundreds of thousands of dollars if either of us kicks it.

It's one potential drawback of early retirement that I hadn't thought much about until recently.  I intend to live to be be 100, but I also don't want to strand my partner in a tough financial situation if my plans don't go as planned. 

Note to self: while detailing your future retirement spreadsheet, be sure to schedule shuffling off your mortal coil for either while you're still working, or AFTER you start drawing that pension.

[boognish]

Better hope your wife doesn't read this forum, stay safe friend.

[deborah]

But if you retire early, you both will have ENOUGH. Does it really matter if you could have had more than enough?

ENOUGH is something that I see as fundamental - our reticence to recognise ENOUGH leads to OMY, 1%WR...

[nereo]

I've made this joke to my SO many times.  If I died today my wife would get just over a year of my salary plus a term life-insurance policy worth half a million.  Ironically at age 29 it was slightly cheaper to pay for a $500k policy than a $250k one.   I guess the insurance companies are hoping I'll keep renewing.  As my spouse she's promised my inheritance, which I hope is at least 20 years down the road but conservatively could be another $100k.  Alive we're 9-10 years from FI.  If I kicked the bucket she'd basically be there.

Yup, i'd better do things every day to show her I have some higher non-monetary value or I might meet my untimely demise in a 'freak' accident ;-)

[brooklynguy]

Sol, you have it backwards.  You are worth move alive than dead.  You are forgetting to value your earnings potential, which is the reason your employer Uncle Sam provides you with all these death benefits.  Consistent with deborah's comment, when you retire early, you better make sure you have enough (and "enough" has to include enough to support your family in the absence of you or your wife or both of you, whether through self-insurance or otherwise).  If you shuffle off your mortal coil after you pull the early retirement ripcord, your wife can't exhume your corpse and send it back into the workforce if the retirement plan hits a rough patch.

Boognish, I admire your adroit posting style; I always enjoy seeing you emerge from the woodwork to deliver a shrewd remark.

[UnleashHell]

I have life and disability through work. If I can’t work then my salary is replaced at 60% - more than enough to live on forever. If I die my wife gets enough to cover every single cent of debt and add to the 401k stash. The money she’d receive would easily be enough to bring up the family.

In just over 2 years I think we’ll have enough to say done – and no longer need to look at any backup plan. Plan A will work for us…

[GuitarStv]

Same situation here.  It makes me a bit uncomfortable.  People had plenty of reasons to want me dead before . . .

[mcneally]

In addition to those two payments, we also have basic group life insurance through work, with the employer paying the majority of the premiums.  The one time payment is a little bit more than your annual salary if you die past age 45.  If I die tomorrow at age 38, it's 1.7 time my annual salary.

Hmm...I'm also a fed and it was my understanding that the life insurance policy I was automatically enrolled in was something like $50k with with ~$10/pay period or $260/yr being deducted from my paycheck for it. I found out how to unenroll and did so as I am young (late 20s) and without dependents and a friend told me the rate was high (I didn't look into it as I don't see a need for me to have life insurance- I think my six figure savings can cover my death costs).

[Mississippi Mudstache]

My wife and I are both worth more dead than alive. It keeps us on our toes.

[CheapskateWife]

My DH makes that joke too...but I would rather have him than the money.

[bogart]

Me too, but I like to imagine that my hubby would be sufficiently sad were something to happen to me that having an extra financial cushion would be a useful, if not strictly necessary, tool.

He's worth a lot more to me alive than dead (even financially), but he's old and expensive to insure, so that factors into the math that guided our decision-making in that realm.  He's also RE and I'd get to keep his income streams were he to die, but I'd lose the non-financial contributions he makes to our household.

[CheapskateWife]

 In addition to that payment, our future pensions, for which we are not yet eligible, would kick in immediately at 50% of currently accrued pension amount paid to the survivor, paid out monthly just as if we had retired on the day of our death and elected a non-reduced survivor annuity, but without any early retirement penalty.  Score!

This was a benefit I was not aware of...Sol, can you show me where to go to learn a little more about this?  It would be a pittance (1/2 of 1% of my high three x my years of service is still only $4000 annually) but it might pay the property taxes!

[MrsPete]

Well, you have three possible scenerios here:

1.  You quit working, but you're still alive.  This is probably the situation in which you're worth the least.
2.  You continue working and remain alive.  So your value is Assets + future earnings.
3.  You die and your beneficiary collects benefits.  Your value is Assets + final paycheck + benefits. 

You might be able to guestimate the above values, if you project how many more years you might work before you retire. 

[dude]

yep, I'm in the same boat, Sol.  I've told my wife many times how well-off she'd be if I kicked. 

Survivor annuity - $2,065/mo. for life
Insurance - $558,000 if death is not accidental, $699,000 if death is accidental
Basic Employee Death Benefit - 50% of basic pay at time of death + $31,786
TSP - @$500,000

It's a wonder she hasn't offed me yet.

CheapSkateWife, see here:

http://www.opm.gov/retirement-services/fers-information/survivors/