Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Pension Advice
Old 05-19-2012, 01:49 PM   #1
Recycles dryer sheets
 
Join Date: Jan 2012
Posts: 65
Pension Advice

Been awhile since I have posted, but have been lurking/reading regularly. Thought you could opine on my pension options. When my wife and I retire, we will both be eligible for a pension.

Our options are as follows:

Me: $3308 per month w. no survivor benefits
Wife: $2981 per month w. no survivor benefits

or

Me $2977 per month w. $1654 per month survivor benefits
Wife $2683 per month w. $1490 per month survivor benefits

I could take my pension at 56, wife at 58 (2 years after me). I thought it would be prudent to take the reduced annuity, but it was suggested that it might make more sense to take the full annuity and purchase life insurance. Any rules of thumbs here, or things I need to consider? As always, thanks.
__________________

__________________
ProGolferWannabe is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-19-2012, 03:05 PM   #2
Thinks s/he gets paid by the post
2B's Avatar
 
Join Date: Mar 2006
Location: Houston
Posts: 4,330
It's hard to get a long range level term insurance policy. Any sort of whole life or UL would be a serious rip off and not worth considering in this situation IMHO.

You don't give any indication of your spending needs. As a couple without survivor benefits, you would get $6,289 but if your wife passes away before you the pension income falls by $2,981. If you pass away first, she loses $3,308 of income. Is everybody happy with that outcome?

Taking survivor benefits means that you would initially get $5,660 ($629 less) but you would drop upon the death of the other party much less. How does this match expected living expenses when other assets are considered?

You never mentioned social security or other possible income sources.

The other considerations are health issues and family longevity.
__________________

__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
2B is offline   Reply With Quote
Old 05-19-2012, 04:19 PM   #3
Confused about dryer sheets
 
Join Date: May 2012
Location: Clarksville
Posts: 2
:
Quote:
Originally Posted by ProGolferWannabe View Post
Been awhile since I have posted, but have been lurking/reading regularly. Thought you could opine on my pension options. When my wife and I retire, we will both be eligible for a pension.

Our options are as follows:

Me: $3308 per month w. no survivor benefits
Wife: $2981 per month w. no survivor benefits

or

Me $2977 per month w. $1654 per month survivor benefits
Wife $2683 per month w. $1490 per month survivor benefits

I could take my pension at 56, wife at 58 (2 years after me). I thought it would be prudent to take the reduced annuity, but it was suggested that it might make more sense to take the full annuity and purchase life insurance. Any rules of thumbs here, or things I need to consider? As always, thanks.
You didn't say if a lump sum is available to you two. If it is that would be the best option. If you are both healthy than a 30 year term is available at your ages and it becomes a simple matter to determine if it is a viable alternative. Compare the term premium vs the amount of reduced 10% income from the annuity payout. Buy enough life insurance to give the surving spouse a lump sum or death benefit equal to the reduced 50% of the annuity. You can go one step further and do a discount net present value calculation of the death benefit lump sum. Do that at varying years since you dont know when a death will occur and compare those figures as well. At your ages this should be feasible, I've seen it work many times if you can obtain preferred underwriting offers from the term ins. co.

If the annuity alternative idea does not work to your advantage then always hedge your bets and get the reduced 50% survivor annuity. If either of you dies young the survivor generally the wife won't be left with too much time and not enough money. Good luck!
__________________
Sizzles is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 01:17 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.