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Has anyone had the numbers ran for themselves on the pros and cons of taking their pension with survivor benefits (100% survivor) vs not taking the reduced pension and getting life insurance instead? We are exploring that now for my retirement (I ask DH how much I am worth to him?). Our insurance man with our financial planner is looking at it now and it seems that we could come out ahead doing it that way, as long as I get the clean bill of health, which should happen. It would cost less than I am giving up if I take the 100% survivor benefit on my pension. What might I be missing in this picture? Like to hear from anyone who has either looked into this and/or did it.
I've heard that there are some who do this. As long as the benefit differential covers the premiums, it's a good option. For me, I won't be considering it. There are medical benefits attached to my pension and they would end with me if there is no survivor benefit chosen.
I've heard that there are some who do this. As long as the benefit differential covers the premiums, it's a good option. For me, I won't be considering it. There are medical benefits attached to my pension and they would end with me if there is no survivor benefit chosen.
Ahh, good point to consider regarding medical benefits. Need to check on this.
Has anyone had the numbers ran for themselves on the pros and cons of taking their pension with survivor benefits (100% survivor) vs not taking the reduced pension and getting life insurance instead? We are exploring that now for my retirement (I ask DH how much I am worth to him?). Our insurance man with our financial planner is looking at it now and it seems that we could come out ahead doing it that way, as long as I get the clean bill of health, which should happen. It would cost less than I am giving up if I take the 100% survivor benefit on my pension. What might I be missing in this picture? Like to hear from anyone who has either looked into this and/or did it.
I gave this a long and hard look when we retired. I knew and discussed with folks who did and didn't. There are variables and pro's and con's that can be personal and individual. One of the patterns was that folks I worked with who had pensions also had bigger incomes then their spouses and they were the ones either with the pension or a considerably larger pension. We each had pensions. Hers good mine better. Depending on your age and and your spouses age and your pension metrics it could be smarter or hmmm maybe not. How much of a reduction hit would you be taking? Ours was 17%, I have seen other pension plans where it would be closer to 50% making the insurance option look better. We also had employer provided insurance and good investments and when I crunched the numbers the knowns of not doing it along with those dollar amounts made me not do it. By taking the survivor option along with doing the 62/70 SS plan would leave the surviving spouse at age 70 with a considerable income stream independent of investments. Crunch the numbers and the variables and sleep on them one night at a time and see which night you sleep the best. If neither keep sleeping on them until you do.
Without a lot of detail, my wife had several pension options so we ran the numbers and decided that max dollars per month with a life insurance policy on her was probably the best financial method. Problem was that as an ex-smoker, the life insurance policy rates were very high so that option went out the window
We did look at survivor benefit options but as women outlive men and the women in her family (genes) live long lives, we decided those options were not worth it so we decided to go with max dollars per month which means bet on her longevity.
In no way is this financial advice. It is what we looked at, evaluated, and decided to do. This was 12 years ago and we would do the same today.
I should have added that we could do it with my wife's pension. While we will examine it when the time comes, I'm guessing her medical issues will reduce the policy to where it doesn't pay.
I should have added that we could do it with my wife's pension. While we will examine it when the time comes, I'm guessing her medical issues will reduce the policy to where it doesn't pay.
That is the scary part when do you get the insurance? I know someone very, very well paid who had a wife in poor health. He along with his advisor were big proponents of the insurance path. He was struck with a serious illness prior to retirement and missed a lot of time and was allowed to hang on for an orderly retirement. He became more long term ill than his wife. If he got the insurance before getting sick the increased pension is real helpful now as long as his insurance remains good. If he didn't get it then he has the reduced pension with a certainty. I don't regret not doing it.
I should have added that we could do it with my wife's pension. While we will examine it when the time comes, I'm guessing her medical issues will reduce the policy to where it doesn't pay.
Yes, as I said, I think mine will be okay, not a smoker or ex and no major issues but did show up with elevated blood pressure this fall. All tests, blood work came out negative so I truly think it is related to work stress and poor eating habits (slightly on higher side of weight). It will be interesting to see how they take it into consideration. Appreciating the comments and discussion here.
Remember that most life insurance premiums go up as the person ages. I have been paying for 20 years on my husband originally premium when he was 42 was about 85 a month it is now 225 a month and rising.
How long will the life insurance policy be for? Say you retire at 62 and your spouse is 60. You take the higher pension and purchase a 20 year term policy. So at 82 if you and your spouse are still alive can you buy another policy? If you can not and die at 83 what happens to your 81 year old spouse?
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