I discovered something the other day that may be common to many pension plans, but it was news to me...
My wife and I each have our own pension plans, from the same employer, and we're the same age. The earliest we can start taking distributions is 54, but we'll be leaving at 50.
I just discovered, that we can't select our pension benefit until reaching 54. The monthly benefit amount for each of our plans varies, depending on what level of survivor benefit we choose. The problem - should one of us get hit by a bus between 50-54, the survivor is hosed. All the surviving spouse would receive, is the lump sum + interest paid into the bus accident's pension plan. While things could be far worse, this is far inferior to receiving even the minimum survivor pension benefit we could opt for at 54 (50%).
Needless to say, all of my ER planning and number crunching is heavily dependent on the monthly pension payment amounts from both of us. An unexpected death after leaving our employer, but prior to pulling our pensions, would throw a huge monkey wrench into the survivor's monthly income. So, I'm thinking we might need to add some life insurance into the mix for years 50-54, to make up for the loss of a pension payment should the unexpected happen.
So...the questions. First, is life insurance a reasonable way to protect a surviving spouse during these 4 years from this risk? And second - just what type of policy would we look for, in this situation? I'm completely ignorant when it comes to life insurance...and given our lack of kids, lack of debt at ER, and decent income once our pensions kick in at 54, I can't see why we would need life insurance beyond that age.
Thanks for any suggestions,
Bill
My wife and I each have our own pension plans, from the same employer, and we're the same age. The earliest we can start taking distributions is 54, but we'll be leaving at 50.
I just discovered, that we can't select our pension benefit until reaching 54. The monthly benefit amount for each of our plans varies, depending on what level of survivor benefit we choose. The problem - should one of us get hit by a bus between 50-54, the survivor is hosed. All the surviving spouse would receive, is the lump sum + interest paid into the bus accident's pension plan. While things could be far worse, this is far inferior to receiving even the minimum survivor pension benefit we could opt for at 54 (50%).
Needless to say, all of my ER planning and number crunching is heavily dependent on the monthly pension payment amounts from both of us. An unexpected death after leaving our employer, but prior to pulling our pensions, would throw a huge monkey wrench into the survivor's monthly income. So, I'm thinking we might need to add some life insurance into the mix for years 50-54, to make up for the loss of a pension payment should the unexpected happen.
So...the questions. First, is life insurance a reasonable way to protect a surviving spouse during these 4 years from this risk? And second - just what type of policy would we look for, in this situation? I'm completely ignorant when it comes to life insurance...and given our lack of kids, lack of debt at ER, and decent income once our pensions kick in at 54, I can't see why we would need life insurance beyond that age.
Thanks for any suggestions,
Bill