ESPlanner permits you to plan explicitly for the possibility of your early death of that or your spouse/partner. To activate contingent planning, click on Enable Contingent Planning in the Contingent Planning folder. Note that if contingent planning is not activated, the inputs entered in the program for the case that you and your spouse/partner live to their maximum ages of life will be used as the inputs for the survivor report case that the family or spouse/partner dies before those ages. There is no check box for families who are single. Instead, there is an extra Special Expenditures screen that allows one to enter contingent special expenditures.

There are seven contingency planning screens. You may need to double-click the Contingent Plans folder name in order to expand the folder tree to see these seven screens.

The first allows you to copy regular plans as contingent plans. The second allows you to enter contingent retirement ages and earnings. The third allows you to enter contingent special expenditures and receipts. The fourth allows you to enter contingent Social Security earnings and benefit collection dates. The fifth screen allows you to enter contingent contributions to retirement accounts. Finally, the sixth and seventh screens allow you to enter contingent plans for your primary and vacation homes in the event that a spouse/partner dies.

In the event of a spouse's death, you may, for example, plan to buy, sell, rent, or move. Again, these contingencies will have an impact only in the amount of insurance needed (and annual premium adjustment if needed) listed in the main report, and in the survivor report.

When the program calculates life insurance recommendations it ignores survivors’ liquidity constraints. So in some cases, it may say to itself: If the survivor can borrow, she, for example, will have a higher living standard with no insurance as a widow than when the spouse was alive. So it recommends no insurance. But then, when it comes to telling the widow how to consume, it will recognize that she may be liquidity constrained and shows results that reveal the constraint: a low standard of living.

In such a case, if the survivor can borrow, she will be materially better off each and every year in terms of living standard with the spouse’s death, even if you buy no insurance. But if the survivor can’t borrow, she will be better off on average over her remaining lifetime, but worse off early on and a whole lot better on later in life. Where liquidity constraint is not a problem, the living standard will be better off for every year following the spouse’s death.

ESPlanner considers all possible dates for your death in the survivor report. You don’t have to tell it when you will die. It considers the possibility of your dying in each year all the way to your maximum age of life. Same for the spouse.

The program knows that if one dies at 54, those earnings will stop. In case of a wife as survivor, it considers the wife’s contingent earnings (earnings contingent on the husband dying) to determine how much life insurance the husband needs to buy at 53 to protect her against his dying at 54.

If the husband wants to see what will happen to the wife were he to die at 54 without any contingencies (without saying, “If I die, then she will . . . ,” simply run the survivor report (with contingency switch turned off) specifying age 54 as the husband’s age of death.