Financial Security For Our Wives/Partners

[BrettGC]

Not all, but many of us have wives/partners that are varying years younger than us - 13 years for me.  I was wondering what you're all doing to secure their financial future after you've departed this mortal coil?  The Philippine age pension is a joke as demonstrated by how much my MiL receives;  it's between 1500 and 3000PHP a month, no clue as to why it varies.

For me, it's vitally important, and even though I have no life threatening conditions, realistically, it's probably not always going to be that way.  We're a little lucky in that upon my death my wife will receive 62% of my 20 year navy service pension as well as a kicker from The Department of Veteran Affairs if I'm still under 60 based on my veterans partial disability pension.  If I'm over 60, it's a little more from DVA. Both relevant departments have been informed - service pensions and veteran disability pensions are administered by different departments in Australia; don't ge me started on that but suffice it to say, it's a little painful at times. 

Additionally, I'm still voluntarily paying into my superannuation fund (401K for the yanks)  which I can't touch until I'm 60 (I'm 54 next month).  It has the advantage of some tax breaks as they're voluntary contributions so it wipes out the tax on both my service pensions at tax return time (military pensions are taxed in Australia at the appropriate marginal rates).  At 60 I'll have the choice of taking that as a pension or lump sum or a combination of both.  Upon my passing she'll be given the option of a pension or lump sum payment (basically the life insurance component). Again, my super fund has been informed appropriately.

My will states my wife is my sole beneficiary of those aspects of my estate - yes, I'm investigating a Philippine version of my will.  

She'd like to leave some sort of legacy for my step-daughter whom I consider a daughter as well accordingly we've been looking at various businesses as well that she can either keep or sell as whe likes.  Some include a water refill station for some time (we costed this well before Re did his video last week and his numbers are pretty spot on, basically 500K PHP out the gate with 25 -35k profit before tax a month.  Do a search for "water refill" on Youtube for more details), a small grocery, a laundromat or a combination of 2 or all.  We also looked at a couple of V-hire vans and employ some drivers but the capital outlay is too large and the time frame before you're into pure profit after the purchase of the vans is too great. 

What are you doing?  Obviously don't go into personal finance specifics in dollars, but I am curious as how you're going to set  up your wife/partner 

 

[Mike J]

Sixteen years difference for us.  We have three properties, two of which could be easily rented with a good income stream.  She would also receive my 401K.  At age 60, she is now 54, she could begin collecting survivor benefits from social security, 71% of what I would be receiving if still alive.  If she waited until she was "full retirement age" at age 67, she would collect 100% as survivor benefit.  The combination of rental income, 401K, and survivor benefits should be more than sufficient to care for her long after I am gone.  

[Old55]

Great topic Brett. Planning for our wife/girlfriend and or children is an important subject. Hopefully we all have a clear will already. 

Some Filipinas may be reluctant to discuss death so sharing plans may be difficult. 

My wife and only beneficiary was an accountant so she understands all our finances and how to access them after my death. 

Edited February 26, 2023 by Old55

[Gas]

1 hour ago, BrettGC said:

  The Philippine age pension is a joke as demonstrated by how much my MiL receives;  it's between 1500 and 3000PHP a month, no clue as to why it varies.

 

The reason your MIL receives a small amount is because she lacks contributions.  If full contributions have been made over the years the pension would be around 18,000 to 20,000php. They can also receive a advanced lump sum of up to 18 months pension at age 60. If someone’s  wife is under 50 and they are living in the Philippines it’s something I would look into.  
 

Me and the wife are a similar age and run a fairly successful business. I spend more than her, so I reckon she will be better off if I go first! 

Think hard before you open a business in the Philippines. Can be very rewarding but comes with some disappointments as well. 
 

Edited February 26, 2023 by Gas

[JJReyes]

An American friend retired in the Philippines and living with a girlfriend asked for advise on how to set aside money for her in case something happens to him.  Since he is giving her a monthly allowance for personal expenses, perhaps there could be a separate account.  P5,000 per month is a good starting point.  Another is a local term insurance policy with her as beneficiary. 

[mountainside]

We're in the US now.  My wife is 40.  Once she turns 60, like MikeJ's wife, she'll be entitled to 71% of my US Social Security pension, which very fortunately will be enough to keep her comfortable for the remainder of her life.  Any tangible assets acquired in the Philippines will be placed in her name.  From the time of my death, until she turns 60, she'll have our US-based savings and securities to carry her through.  I hope they'll be enough;  I'm taking the long view on stock market appreciation.

Once in the Philippines, I'll hire a local estate planning attorney, as suggested recently by members commenting on a different topic. 

As Old55 mentioned, this is a great topic.  I'm looking forward to reading all of this thread.

[mountainside]

4 hours ago, JJReyes said:

An American friend retired in the Philippines and living with a girlfriend asked for advise on how to set aside money for her in case something happens to him.  Since he is giving her a monthly allowance for personal expenses, perhaps there could be a separate account.  P5,000 per month is a good starting point.  Another is a local term insurance policy with her as beneficiary. 

A lump-sum option might be for your friend to set up a US savings account with a payable-upon-death proviso in the girlfriend's name. The "POD" account would be payable to his girlfriend upon presentation of his death certificate.  She'd have no access to the account prior to his death. He could, at any time while alive, revoke the "POD" designation.  Depending upon the amount in the account, the girlfriend might be subject to Philippine estate taxes upon your friend's death.

[JJReyes]

19 minutes ago, mountainside said:

A lump-sum option might be for your friend to set up a US savings account with a payable-upon-death proviso in the girlfriend's name. The "POD" account would be payable to his girlfriend upon presentation of his death certificate.  She'd have no access to the account prior to his death. He could, at any time while alive, revoke the "POD" designation.  Depending upon the amount in the account, the girlfriend might be subject to Philippine estate taxes upon your friend's death.

I will relay this information to my friend who is in the United States at the moment.  Perhaps he can set it up during his visit.

My wife and I have set up our estate that includes instructions with our banks and financial institutions so that anything remaining upon presentation of our death certificates, automatically transfers to our children.  This will be accomplished within 72 hours and tax free.  The reason this is possible is because we have no property.  This is for the United States.  Philippines is something else.  Settlement of estate is difficult if you own land.    

[manofthecoldland]

In my situation, my wife is not legally entitled to either my SSA benefits or any pension survivor allotments. She has never lived outside of the PI, nor was she married to me when I retired. So nothing will arrive from abroad, after I depart from the earth.

Aware of this impending eventual income cessation for her, I have for many years, tried to prepare her for this eventuality with several preparations.

1.)   I make sure that she maintains her PI SSS contributions, either yearly or quarterly. You have to study the system and decide how you want to use it. In her case, we have gradually stepped up her contributions over the years to reach maximum before the age of 55. This is not allowed for salaried people, such as government employees and such. However, as a life long vendor, she has the option of doing so.

   It won't be much compared to what I provide her with, however, she will not fall into dire poverty and be able to secure food, water, electricity, etc. Much like many Americans who try to exist on American SSA old age pensions.

2.)   Over the last 2 decades, she acquired a private lot and built a small initial house for us so we do not have to worry about rent payments. Then we gradually and incrementally improved upon and expanded it, according to her needs and desires. So she will have a decent home and roof of her own over her head. And I guess that she could always sell it someday.

3.)  Over the years, I have also bought and paid for 7 other privately owned properties, none of which produce income, but are sited near the city centers of commerce, other apartment structures, and the beach front areas where there resorts and restos. The titles are clean and we keep the taxes up to date. I told her that, they would be to sell off for her old age needs... like the one we bought from a elderly lawyer's widow , upon which we built our home. That is what he did for his wife, possibly.

All of her properties were bought through connections, at extremely reasonable and advantageous prices when the opportunities came up, often by chance, sometimes using elderly relatives' relationships with the owners.

4.)  We made sure that her daughter got a good education - 5 years here, became a professional nurse, and with the help of her older sister who was a nurse and married an Australian, immigrated to Australia. She married an architect and is raising a family there now. For this reason, I told her that she could always go live with her daughter if she wanted. However, she didn't care for the Sydney live style while visiting briefly, several years ago.

5.) She took responsibility for overseeing, the raising of her cousin's children, paying for their urban poor lot/maintaining its basic structure, providing rice and clothes, school needs etc. They are now coming of age, and indebted to her in some social manner.

6.) She quasi-adopted a co-madre's eldest son's family, who tended to her when hospitalized, and assist with many things. I guess it makes up for the daughter lost to Australia.  We set up the family father with his own motorbike and used sidecar, so he wouldn't have to pay a daily use fee to another owner, which used to have him working 12 hours with small or sometimes even no profit. I also pay for his yearly operator and vehicle fees, to alleviate that large burden so he can concentrate on supporting his wife and 3  children by working and focusing while legal.

7.) Twenty years ago, we bought a lot from her uncle and built her first simple home. She didn't like living in that barangay with the relatives there, so she let a cousin move his family in, rent free, since he was a good and industrious person. He and his family have improved it over the years, but my wife still owns it. I funded John for a wood shop there years ago, and he employed several other men, but the typhoon of 2012 destroyed it. I think he has been working abroad since then, being a skilled woodworker and carpenter. He often tells her that someday, he hopes to buy it from her and pay her for it..... and I tell her, "Well, you could always move in with them, since its your house and lot that you have been so charitable with over the years, ha-ha." She did not laugh at my suggestion.

8.) In my current absence, she has been spending time living with her quasi-adopted family in Estancia, Iloilo, a fishing town on the NE tip of Panay Island. Like most Filipinas, she prefers to be with family of some sort, rather than be living alone when I am not there. She has decided to vend barbecue since there is little competition where she is at. She is teaching her step-daughter the trade. Last month I bought a inexpensive, rudimentary and unfinished row house across from theirs, when it became available from the owner who approached her. I agreed, because the family of 5 and her where living in a very large room, and only recently had the father build a bedroom partition wall for he and his wife. They got electricity recently, but no piped in water yet. So now she can have her own place to live alongside them when she slowly makes it habitable.

The new housing development president and council offered her an empty business lot to purchase near the entrance gate where there is much traffic, because she is the only barbecue vendor there and the trike drivers ask her to sell coffee too in the morning, since it is new enough for no small  businesses to have developed. They said, it would be better, since she was selling from a small counter on the street corner near the house. Not supposed to sell on the street, they said, so better we give you a lot (very small money for me) to sell from since all the residents like having a vendor there, and you're the only one who took the initiative.

So, in keeping with the Philippine culture, I think the best way for a fellow to insure his wife's future after his demise, is to make sure that her social network is in good order with lots of 'utang na loob' (debt of the heart)/goodwill built up over the years, and several strands of possibilities for either small income or group living arrangements with the younger generation.

Its sometimes not enough to have an outside money source to insure a healthy survival for your widow. She will need a positive social structure to make her happy and complete. Usually a multi-generational one.

 

[Kingpin]

6 hours ago, mountainside said:

A lump-sum option might be for your friend to set up a US savings account with a payable-upon-death proviso in the girlfriend's name. The "POD" account would be payable to his girlfriend upon presentation of his death certificate.  She'd have no access to the account prior to his death.

How does that work without an SS#?