Relying on a pension?

[hausfrau]

I couldn't find a thread on this, so here goes. I am 12 years younger than DH. All of our retirement planning is based on my age (I'm 47). He is eligible for a modest pension in 6 years from a prior job that will give us about 20K a year. I have never counted this pension in our retirement planning because it does not have a death benefit.

I'm wondering if this is wise. With SS and this pension we won't have to touch our nest egg, unless there is some giant expense. For the record, I have never counted our SS in our calculations either.

Right now, DH loves his job and does not want to retire for at least a few more years. His company is not terribly stable though. I just want to have the confidence to say, OK, don't worry about looking for a new job if you don't want to.

Right now, Firecalc has us at 100% if we go out 50 years (not including SS/pension). This is for a relatively modest lifestyle though. We both tend to be a little more conservative, but is this too conservative? Would you count the pension in your planning?

 

[travelover]

...... Would you count the pension in your planning?

If the pension doesn't have a survivor option at a reduced payout, you can divert part of it to a life insurance policy for you. Then you could count on it.

 

[Rianne]

You're in the "catbird's seat." To get 100% 50 years out, not counting SS or pension is enviable. If DH can take it or leave it depending on the company's success, you're golden.

 

[Big_Hitter]

I have never counted this pension in our retirement planning because it does not have a death benefit.

private sector defined benefit plans are required to offer a QJSA (qualified joint and survivor annuity) at the participant's annuity starting date

I started my pension March 1 and it is a 50% qjsa

 

[hausfrau]

private sector defined benefit plans are required to offer a QJSA (qualified joint and survivor annuity) at the participant's annuity starting date

I started my pension March 1 and it is a 50% qjsa

Thanks for the info. I was completely clueless regarding this. We never gave the pension much thought honestly.

 

[Big_Hitter]

Thanks for the info. I was completely clueless regarding this. We never gave the pension much thought honestly.

pensions rock - they make retirement planning easy

nothing like a steady stream of income month after month after month after...

 

[hausfrau]

You're in the "catbird's seat." To get 100% 50 years out, not counting SS or pension is enviable. If DH can take it or leave it depending on the company's success, you're golden.

Well, that's for a very pretty modest COL. We do have fairly low expenses now, but we do worry about health care costs and other big ticket items. I think we have a tendency to be overly cautious though.

 

[Big_Hitter]

Well, that's for a very pretty modest COL. We do have fairly low expenses now, but we do worry about health care costs and other big ticket items. I think we have a tendency to be overly cautious though.

if you manage your MAGI correctly you should be able to get heavily subsidized health coverage on the exchange

my plan is to live of taxable savings plus pension and rental income as long as possible - should keep our MAGI well below 400% FPL

 

[hausfrau]

if you manage your MAGI correctly you should be able to get heavily subsidized health coverage on the exchange

my plan is to live of taxable savings plus pension and rental income as long as possible - should keep our MAGI well below 400% FPL

Yes, we should be able to do that.


As an aside, I can't believe I wasn't aware of this law. I thought I was pretty well versed in this retirement stuff. I remember seeing on his paperwork 10+ years ago that there wasn't a death benefit. Maybe I misread that. Maybe they just referring to the full amount. I'll have to check up on that again. I mean, even a 50% haircut is worth a lot.

 

[Amethyst]

Plus, with a pension, you still get to claim you are On a Fixed Income and demand reduced prices for everything

 

[Big_Hitter]

Yes, we should be able to do that.


As an aside, I can't believe I wasn't aware of this law. I thought I was pretty well versed in this retirement stuff. I remember seeing on his paperwork 10+ years ago that there wasn't a death benefit. Maybe I misread that. Maybe they just referring to the full amount. I'll have to check up on that again. I mean, even a 50% haircut is worth a lot.

the haircut shouldn't be that bad, maybe 8 to 10% for a 50% J&S? It depends on your relative ages and the actuarial assumptions used to convert the normal form of payment

 

[ExFlyBoy5]

pensions rock - they make retirement planning easy

nothing like a steady stream of income month after month after month after...

You aren't kidding. I call it "wake up pay." As long as I wake up on the 1st of every month, I am getting PAID!!!

 

[Big_Hitter]

You aren't kidding. I call it "wake up pay." As long as I wake up on the 1st of every month, I am getting PAID!!!

it's like hitting the lotto that pays a fixed amount per month for life

 

[Teacher Terry]

We chose the option of leaving the whole pension to each other. I took a 300/month hit because he is 5 years younger and he took a 150/month hit. When one of us dies the one alive gets his or hers restored to the full amount.

 

[ExFlyBoy5]

it's like hitting the lotto that pays a fixed amount per month for life

Sort of...except there was quite a bit of work and a LOT of gnashing of teeth for 22 years to "win" that lottery. Ed McMahon sure as hell didn't show up and say, "YOU WON!!!"

 

[Big_Hitter]

Sort of...except there was quite a bit of work and a LOT of gnashing of teeth for 22 years to "win" that lottery. Ed McMahon sure as hell didn't show up and say, "YOU WON!!!"

yep I put in 20 years at my prior MEGA for mine...

 

[Big_Hitter]

When one of us dies the one alive gets his or hers restored to the full amount.

that's called a pop-up provision

 

[joeea]

I have never counted this pension in our retirement planning because it does not have a death benefit.

That's unfortunate.

It will be hard to "count" the pension, since you don't know when it will start, nor when it will end. Has the "no survivor benefit" decision already been made? If not, you almost certainly should opt for 100% survivor benefits.

If your spouse is the higher SS earner, you two should strongly consider delaying his social security benefits until 70. That way, you'll have additional income upon his passing. Given your age discrepancy, it's likely he will be the first to pass. You want to make sure you are protected financially when that happens.

For the record, I have never counted our SS in our calculations either.

That makes no sense to me, unless neither of you are entitled to any benefits.

 

[copyright1997reloaded]

I made an unusual choice when it came to Pension decision time. I decided to do a 50% J&S with my child who was 7 at the time (I was 51). The rationale was that with old parents there was a reasonable probability that I could kick prior to DC becoming an adult.

In terms of cost, it was a roughly 8% hit to my pension payments. Part of my rationale for doing it this way (vs buying life insurance) was that the 8% reduction is pre-tax, while life insurance payments would be after tax.

I've never told my child about this (but have it listed as part of my "To be opened on death" instructions).

 

[hausfrau]

I made an unusual choice when it came to Pension decision time. I decided to do a 50% J&S with my child who was 7 at the time (I was 51). The rationale was that with old parents there was a reasonable probability that I could kick prior to DC becoming an adult.

In terms of cost, it was a roughly 8% hit to my pension payments. Part of my rationale for doing it this way (vs buying life insurance) was that the 8% reduction is pre-tax, while life insurance payments would be after tax.

I've never told my child about this (but have it listed as part of my "To be opened on death" instructions).

Are these decisions made at the time you draw the pension or before? I don't think my husband ever specified one way or the other.

 

[Teacher Terry]

Ours couldn’t be made until retirement.

 

[hausfrau]

Ours couldn’t be made until retirement.

I'll keep this in mind. I've learned a lot today. Thanks everyone!

 

[Big_Hitter]

Are these decisions made at the time you draw the pension or before? I don't think my husband ever specified one way or the other.

when you are eligible to begin receipt of your pension, contact the plan administrator, tell them when you want to start payments and they will send you a packet

 

[gauss]

Have your husband contact his HR department and request a copy of the pension plan SPD aka summary plan document. This should lay out all terms of the pension.

pensions rock - they make retirement planning easy

nothing like a steady stream of income month after month after month after...

I have to pinch myself each month when DW's pension check comes in the mail (yes - I enjoy getting the tangible check). I wonder if this will wear off after the first year.

-gauss

 

[copyright1997reloaded]

Are these decisions made at the time you draw the pension or before? I don't think my husband ever specified one way or the other.

They have to be made before the pension is drawn on and are irrevocable.