Thanks everyone who has helped mold our thinking to date. I feel we're close on taking the pension annuity but assessing whether to go 100% J&S at a cost of $4K less pension per year than 50% J&S (or maybe even 75% J&S at a cost of $2K less pension per year) since we have a paid off $600K home, $19.4K in other pension income with an additional $10K from DW pension in 3 years, as well as $3.8M portfolio conservatively invested and SS in 10 years?
Some IRR analysis indicated that the 100% J&S was the most optimal of the three scenarios but curious of thoughts whether it's truly worth it when other financial assets are considered?
Some considerations I would wonder about:
1) The lump sum allows you to invest to keep up with inflation. Do any of the stated available monthly annuity amounts have COLA provisions. If not, and if inflation is a worry as to purchasing power of annual income down the road, that might point to lump as perhaps the way to go.
2) As you age, will you---or your survivor if you die---be "able" to smartly and properly manage investment of a lump sum, good enough to keep it ahead of inflation? Or have the time or even inclination to want to manage the investment? If not, then monthly annuity is perhaps the way to go.
3) What debts do you have into the future, and what other income streams do you, and/or your survivor, have or will have, and what other assets do you have? You have stated those answers above. Given what you have already to leave as inheritance for your heirs, and also to serve as inflation hedges on the bulk of your assets, I myself would go for the guaranteed monthly annuity. A substantial guaranteed monthly annuity is a very nice thing to have in my book!
4) Choosing among the monthly annuity options you have available, depends on income streams your survivor would otherwise have. If survivor will have adequate income streams otherwise, then the largest monthly annuity with nothing to survivor would be my choice. But if survivor still could use "some" more income, then one of the three J&S options would be the way to go. Generally speaking, I would go for the 50% J&S option to get my survivor to a "comfortable" survivor's income, yet leave the current benefit while I was alive larger than otherwise to maximize our draw during my life expectancy. But you say some IRR analysis of your particular options shows 100%J&S would be optimal. Assuming your IRR analysis was valid and based on proper assumptions, one's gut "first choice" is always a decision you can live with and be happy.