Question Regarding Supplemental Benefit Payment

[PandaBear]

Hello, I found these boards this spring and received some good information when I first posted (in March). I am now trying to follow through on all the things I need to do.

So I discovered recently that I can receive a supplemental benefit through the teacher retirement system. Basically, it accounts for the extra compensation you might receive that goes beyond your base salary. For me, I work extra days and I have also worked during the summer.

There are four options a person can choose.
One is a benefit that lasts as long as you live (there is no survivor benefit for any of the options) The other three are a defined amount for a period of time-either 3, 5 or 10 years.

Currently for me, this could be about $250 for my life, $1100 a month for 3 years, $700 a month for 5 years or $425 a month for 10 years. The first one is called a "member only annuity". The other three are "period certain annuities", which I assume means there can be a survivor payment. (I can't really find the info which specifies this)

Is there a reason to do one over the others? It seems to me that the best option might be the 10 year payment, assuming it can also go to a beneficiary. Any comments?

Thanks, Panda

 

[pb4uski]

Of the three fixed options, the $450/month is the clear winner to me as the present value is highest using any reasonable discount rate. Assuming a 3% discount rate, you would need to live 19.5 years to break even with the 10 year period certain option.

According to immediateannuities.com, the $250 per month for life is roughly equivalent to $52,000 lump sum today and the 10 year certain annuity is roughly equivalent to $48,000 today.

If you are in good health and have good family longevity and the plan is financially well funded, I would lean towards the life annuity. If your health is questionable, then it seems that the 10 year is the best of the period certain options.