Pension Electives

[landover]

Electing survivor benefit should also consider LTC requirements. I think if the pension is relatively secure and covers large part of expenses then it may be beneficial to not have LTC insurance and select 100% survivor benefit. This may not fit all the situations but worth considering.

 

[Mulligan]

A friend of mine who will have a secure government pension in about 10 years was mentioning he was going to take the full 100% option on his retirement. I kept my mouth shut and laughed on the inside. Seems he doesnt know in our state the spouse has to sign off on this to get the option 1. Since she does not have a pension, I will let him find out in due course time, that this decision is out of his hands

 

[chemist]

A friend of mine who will have a secure government pension in about 10 years was mentioning he was going to take the full 100% option on his retirement. I kept my mouth shut and laughed on the inside. Seems he doesnt know in our state the spouse has to sign off on this to get the option 1. Since she does not have a pension, I will let him find out in due course time, that this decision is out of his hands

In fact what you say is true in ALL states since it is a federal law under ERISA that a spouse must sign away their rights to a survivor's benefit and it must be notarized.

 

[Raygun99]

In fact what you say is true in ALL states since it is a federal law under ERISA that a spouse must sign away their rights to a survivor's benefit and it must be notarized.

I had similar choices at age 57. Mega corp with no cola We did the numbers and agreed a 20 year term was better for us. And yes she had to sign her rights away. In 20 yrs the purchasing value with no cola will be one half or less.

 

[sn2792]

I took 75% survivor for my dh. If he dies before me, it pops up to single for me. Part of my pension was a lump sum that was rolled to IRA. All of his was a lump sum. Difference for my monthly pension was $300 reduction.

 

[heirloom]

In fact what you say is true in ALL states since it is a federal law under ERISA that a spouse must sign away their rights to a survivor's benefit and it must be notarized.

That's true...

I took 100% and my husband is going to do the same. Sometimes I tease him and say "I don't know if I'll be able to survive on my pension".

Anyhow, we feel when one dies the other will have their pension, SS, 401K's and IRA's to survive on as long as the nursing home doesn't take it all.

 

[heirloom]

[QUOTEsorry but it's the engineer in me.][/QUOTE]

TIGHTASAWAD.....I can see where you get your nickname too!!

 

[brett]

We are currently in the process of evaluating this option. At first blush it looks like a reduction in pension is the way to go but we are working through the options.

There are tax implications for us. The life insurance route means working with after tax income (our pensions are fully taxable). The pension reduction route uses 'less expensive' pre tax income. The life insurance payout is not taxable but the pre tax cash requirement can change the time value of money equation.

An insurance premium of $400. per month could require a pre tax income amount of $500. in order to compare to a $400. per month reduction in pre tax pension income.