Brian and Tina recently married, second marriage for both. Brian is 64 previously divorced and Tina 62 was a widow. Both had children from their prior marriages.
Their goal was to retire in 3 years, when Tina would be eligible for Medicare. They wanted an income and tax strategy that would provide income for as long as they needed. They were also conflicted on how to ensure the other spouse would be taken care in the event of death but also to not disinherited their children.
Brian was a good saver and has accumulated a nice 401K savings. Tina, a stay-at-home mom, savings was due to her and her deceased husband’s diligent saving in his 401k and his life insurance proceeds. Combined they had sufficient assets and income to provide income until they were both 90. Their goal was to leave the assets that they brought into the marriage to their perspective children. Tina felt that her deceased husband had prepared them well for the future and therefore felt her assets should be left to their children.
Since Tina remarried after age 60 and had been a stay-at-home mom, she was entitled to her late husband’s survivor social security but elected to delay starting her benefit until Brian retired and could collect his full retirement benefit. This also helped them mitigate their taxable income in retirement. They decided to name each other as beneficiary of retirement assets but in order to preserve their pre-marital estates for their own children, they worked with an estate attorney to create both marital and familial trusts and utilized life insurance to restore the assets utilized during their lifetimes for income. Also naming their children as beneficiaries meant the children would inherit assets without the tax implications of inheriting retirement assets.
Tina and Brian were pleased to understand that their retirement income plan was designed for their lifetimes and it could potentially provide a legacy for future generations.