Maximize Retirement Cash Flow
Pensions. Pre – retirees who have participated in a formal pension plan at work have a choice as to what form to take their pension payout. A married retiree, however, must take his or her pension benefit in the form of a joint and survivor payout. Under this option upon the death of the retiree, his or her surviving spouse would receive a monthly payment of at least half of what the deceased had been receiving. The plan participant can, instead, receive a life only monthly payment or some other form if the spouse waives his or her right to the joint and survivor benefit. Note that a life only payment is typically much greater than a joint and survivor payout.
Life Expectancy. Since a joint and survivor payment lasts for the life of the retiree and the over life of his or her spouse, a married pre – retiree who has a less than average life expectancy (for his or her age) will typically choose a joint and survivor payout. Other factors that influence the pension payout decision are the age of the spouse (relative to the age of the pre-retiree) and the spouse’s life expectancy (relative to the life expectancy of the pre-retiree).
By way of example, if the pre-retiree is younger and healthier than his or her spouse the couple would typically be better off by going with the life only payout because the monthly payment would be greater than the monthly joint and survivor payment. If the pre-retiree is medically impaired and if the plan allows the couple would typically be better off by opting for a lump sum payment.
Since the life only pension benefit produces the highest monthly benefit but ceases at the death of the retiree it is important to understand the pre-retirees life expectancy as of his or her retirement date. This is one reason why I encourage my clients to obtain formal life expectancy reports (to facilitate an informed decision as to pension plan payout options).
Create Your Own Pension. Some pre-retirees, especially those who have only a modest or no pension benefit can be well served by creating their own private pension benefit, using some form of commercial annuity or cash value life insurance policy. Here too, in setting up such a plan, it is important for the client to know – not guess – his or her life expectancy. I encourage my clients to speak with their financial advisor about private pensions.
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I offer a free initial consultation. We can meet at my office in The Brooks Executive Suites, 9990 Coconut Rd, Bonita Springs FL, 34135. We can also meet online if this is easier for you. If what I do sounds like something you’re looking for in an attorney I encourage you to contact me through the form below or call (239) 266-5671.