He Was 96: The Financial Lessons His Life (and Death) Taught Us

My oldest client died last night. He was 96. 

I received this news from his wife within four hours of his passing. It might seem odd that she got ahold of me so quickly, but I am her trusted financial advisor. I knew what she was thinking about. She was the survivor beneficiary and now, more than half of her monthly income will go away now, and she is 17 years his junior with (hopefully) many years remaining. She offers all of us important lessons in understanding financial planning decision points and taking appropriate actions at the right time.

He was an Air Force pilot and earned a military pension for his 20 years of service. His SBP was assigned to his first wife in their divorce. His 50% of the military pension will no longer be income for his surviving spouse of 50+ years.

He became a schoolteacher, met his new wife, and both earned a lifetime teacher’s pension. However, this retirement was in an era where very little financial education was provided by employers in making survivorship elections. There was no ChatGPT to guide you on your way. So, no survivor election was made, and this inflation-adjusted pension income will also end.

And then there is Social Security. The surviving spouse keeps the higher of the two benefits. Their benefits were fairly equal, but it’s a 50% income reduction in that category as well.

All totaled, her new monthly income will be roughly 35% of what it was before her husband passed. No one wants to find themselves in this situation late in retirement. Let’s look at what may have seemed like small decision points that could have led to improved financial outcomes.

Making Survivor Benefit Plan Decisions Together

When service members retire from the military, one of the most consequential, and often misunderstood,  financial decisions is the Survivor Benefit Plan (SBP) election. The SBP provides up to 55% of the pension payment as ongoing income to a surviving spouse if the retiree passes away first, effectively serving as a lifetime inflation-adjusted annuity for the survivor.  

However, the SBP election must be made at the time of retirement, and it becomes irrevocable in most cases. Too often, the decision is made quickly or without meaningful discussion between spouses. In the case of my clients, the SBP was assigned to a prior spouse as part of a divorce decree, a common but often overlooked detail that can have lifelong consequences.

When a new spouse comes into the picture later in life, that person may be left without access to any survivor benefits. Unless deliberate steps are taken during open enrollment periods or upon remarriage, the coverage cannot be transferred.

Both spouses must be active participants in the SBP decision, and a service member needs to review that decision after major life changes such as divorce or remarriage. A small percentage of income given up during retirement for SBP premiums can provide decades of income security for the surviving spouse.  While “the numbers” might suggest acquiring life insurance as a substitute, there are some spouses who are more comfortable with that “check of the month club”.  This is a tradeoff that deserves detailed analysis and joint agreement.

Optimizing Social Security Claiming Strategies for Couples

Social Security remains one of the most under-optimized components of retirement planning, particularly for married couples. Many retirees view it as a simple “start as soon as you can” benefit. But the timing and coordination between two spouses can significantly impact the lifetime and survivor benefits.

When one spouse passes away, the surviving spouse keeps the higher of the two benefits. That means the larger benefit becomes a “joint and survivor” payment — it continues for as long as either spouse lives. Therefore, it often makes sense for the higher earner to delay claiming benefits until age 70, maximizing the survivor benefit.

In the case of my clients, both had similar benefit amounts and claimed early, a decision that seemed harmless at the time. But now, the surviving spouse faces a permanent 50% reduction in household Social Security income on the already much smaller lifetime benefits.

When one spouse is significantly younger, as in this case by 17 years, the long-term implications of early claiming can be profound. A couple may live comfortably in their 70s, only to have the younger spouse face financial hardship for 20 or more years after the first death.  

The best strategy is often collaborative: delay benefits for the higher earner while allowing the lower earner to claim earlier, creating a balance of near-term income and long-term protection. Your financial planner can model multiple claiming scenarios, not just for the retirees’ lifetimes but also for the survivor’s projected longevity.  Factors such as taxes, Medicare premiums, and portfolio withdrawals also help determine how Social Security fits within the broader income plan.

Using Life Insurance or Annuities to Protect the Surviving Spouse

For many couples, particularly those with single-life pensions, there is a significant risk that income will disappear at the first death. When survivorship options were not elected, or not available, life insurance and annuities can serve as powerful tools to fill that gap.

Life insurance is often overlooked as couples approach retirement, yet it can be one of the most efficient ways to replace lost income. A well-structured insurance plan maintained into retirement, can provide tax-free funds to supplement income or establish a personal “survivor benefit” when pensions cease. Even modest policies can make a meaningful difference in preserving financial independence for the surviving spouse.

For retirees who are beyond the point of insurability or who prefer guaranteed lifetime income, annuities can offer similar protection. These instruments create a contractual income stream that continues for both spouses, or for a predetermined number of years, ensuring that the survivor’s essential needs are met.

The Broader Lesson: Plan Together, Decide Intentionally

The passing of a spouse is an emotional event that becomes exponentially harder when financial uncertainty is added to the grief. What stands out in my client’s story is not just the financial loss but the accumulation of small, missed opportunities, each one seemingly minor at the time, but together resulting in a 65% drop in household income.

Financial planning is, at its core, about anticipating transitions. Life, health, and relationships evolve, and the plans we make in our 40s or 50s must be revisited regularly to ensure they still serve us in our 70s, 80s, and beyond. Whether it’s reviewing pension elections, updating beneficiary designations, or exploring insurance and annuity options, every couple should treat these as shared decisions.

The key takeaway is simple but vital: every financial decision has a survivor dimension. The question to ask at every major juncture is, “If I’m not here, what happens to the person I love?” The answer should guide not only the math of retirement but also the heart of it.

Closing Reflection

My client lived a long, full life; one marked by service, dedication, and love for his wife. But his story reminds us that financial planning is not just about growing wealth; it’s about ensuring stability for those who remain. The surviving spouse now faces the challenge of living on one-third of her prior income, a difficult reality that could have been softened with just a few different decisions decades ago.

This serves as a timeless reminder: the best financial plans are made together, with both lifetimes in mind.

If this article spoke to you, the advisors at MFAA are here to help.  All MFAA advisors are fee-only and will not sell you a product.  Instead, they will help you understand how the decisions you make today can affect your financial future.  They’ll also help you make a financial plan to make more informed decisions.  Find an MFAA advisor here and reach out today!