I have a two-year old with a second child now on the way. As I will be the only one working for some time moving forward, I wanted to reevaluate my life insurance needs.
I went on the MySocialSecurity portal to see what kind of survivor benefits would be available if I died in the near term (we should be more-or-less financially independent within about 5 years, so there is not a long runway to contend with). I was very surprised to see just how generous the benefits seem to be, but I want to make sure they are reported correctly on the website and that I am understanding them correctly.
According to the website, if I die this year, then:
1) My wife will be entitled to $2,901 per month as long as she has a child under 16 in the home.
2) Each child will be entitled to the same amount until age 18 (or longer if they are still in high school) as long as they do not get married.
3) Those items are, however, subject to a maximum family benefit of $6,771 per month.
From this, I take it that my family would receive $6,771 total per month until my oldest turns 18. Then my family would receive $5,802 until my youngest turns 16. Then my family would receive $2,901 until my youngest turns 18. If these numbers are correct, then my family should be more than fine without getting any term life insurance.
Are the figures reported for survivor benefits on the portal typically accurate? I know that the "retire at age x" calculator they have can make unfounded assumptions, i.e., assuming that you will continue to earn your current salary all of the way until you claim your benefits. Is there any hidden assumption of that nature for the survivor benefit calculation? It seems that it shouldn't be making assumptions about future earnings, because it purports to show what the benefits would be if I die in 2024.
Why are these benefits so large? I am 37 years old, and most of my 35 years are zeroes. I have 10 years of earnings at the cap and 3 additional years with much smaller amounts. I would not receive as much as $2,901 / 0.75 if I had no additional earnings and claimed at FRA. I had thought that the survivor benefits would be calculated using what my benefit would be if I were to have no additional earnings and then claim at FRA, but perhaps they make some adjustment to remove the impact of all of the zero years if you die young?
Anything else I should be considering?
I went on the MySocialSecurity portal to see what kind of survivor benefits would be available if I died in the near term (we should be more-or-less financially independent within about 5 years, so there is not a long runway to contend with). I was very surprised to see just how generous the benefits seem to be, but I want to make sure they are reported correctly on the website and that I am understanding them correctly.
According to the website, if I die this year, then:
1) My wife will be entitled to $2,901 per month as long as she has a child under 16 in the home.
2) Each child will be entitled to the same amount until age 18 (or longer if they are still in high school) as long as they do not get married.
3) Those items are, however, subject to a maximum family benefit of $6,771 per month.
From this, I take it that my family would receive $6,771 total per month until my oldest turns 18. Then my family would receive $5,802 until my youngest turns 16. Then my family would receive $2,901 until my youngest turns 18. If these numbers are correct, then my family should be more than fine without getting any term life insurance.
Are the figures reported for survivor benefits on the portal typically accurate? I know that the "retire at age x" calculator they have can make unfounded assumptions, i.e., assuming that you will continue to earn your current salary all of the way until you claim your benefits. Is there any hidden assumption of that nature for the survivor benefit calculation? It seems that it shouldn't be making assumptions about future earnings, because it purports to show what the benefits would be if I die in 2024.
Why are these benefits so large? I am 37 years old, and most of my 35 years are zeroes. I have 10 years of earnings at the cap and 3 additional years with much smaller amounts. I would not receive as much as $2,901 / 0.75 if I had no additional earnings and claimed at FRA. I had thought that the survivor benefits would be calculated using what my benefit would be if I were to have no additional earnings and then claim at FRA, but perhaps they make some adjustment to remove the impact of all of the zero years if you die young?
Anything else I should be considering?
Statistics: Posted by HootingSloth — Thu Mar 21, 2024 9:15 am — Replies 0 — Views 75