Answers

  • Get a FREE phone consultation
    with an advisor. Learn more...
  • Choosing how you decide to take your pension is very important because once you decide, your decision usually cannot be changed.

    An annuity with a survivor benefit allows for the payment to continue after your husband passes. Sometimes, you are given a choice of whether the surviving spouse will receive 50%, 75%, or 100% of the surviving benefit. For example, your husband receives a monthly benefit of $1,500 and chooses that you will receive a 50% survivor’s benefit. Upon your husband’s passing, you would receive monthly payments of $750.

    A single life pension is a lifetime annuity that will pay out over your husband’s life. Upon his death, the payments will no longer be made. As you said, the monthly payments for a single lifetime annuity are higher because the expected pay period is not as long as a pension with a survivor benefit. When married individuals apply for their pension distribution, it is usually always default for the survivor benefit to apply. A waiver must be signed by both, the employee and their spouse, which states both parties understand the spouse has waived all rights to receive payments upon the death of the employee who originally received the payments.

    When deciding which kind of distribution to take, one major factor is your projected expenses. If you have other retirement savings accounts and you are not worried about covering expenses, then a survivor annuity consisting of lower payments may be the appropriate choice. Calculate sources of income you will have during retirement from all savings accounts, retirement accounts, and estimated social security payments. SS payments and retirement distributions may provide plenty of income which allows you to uphold your lifestyle, retirement goals, and normal expenses.

    However, if you do have limited retirement savings aside from the pension, a survivor annuity may be to your benefit to provide some income protection for should your husband pass first. Decide how important a survivor annuity is to each of you and how estimated expenses change as a widow or widower.

    This answer is provided as general information only and provided by Master’s students pursuing a degree in Personal Financial Planning at Texas Tech University. No warranty is made regarding the fitness or accuracy of the information provided in this answer. You should seek advice from a licensed CPA, attorney or Certified Financial PlannerTM as to your unique financial situation.

  • Login to rate this answer:   Answered on 4/5/2013
**All above answers are provided as general information only. No warranty is made regarding the fitness or accuracy of the information provided in this answer. You should seek advice from a licensed CPA, attorney or CERTIFIED FINANCIAL PLANNER™ as to your unique financial situation.