You have made many important decisions during your lifetime. Just before you retire you are going to be asked to make another one. That decision will affect your monthly retirement income for the rest of your life.
Before you actually retire, you will have to decide what benefit option to select from your qualified retirement plan. Simply put, you have two basic choices:
- Select a "life only" option that will pay you a monthly retirement benefit as long as you live, and cease upon your death;
- Select a "joint life" benefit that will pay you a reduced monthly retirement benefit as long as you, or your spouse, are alive.
Retirees often make this decision at the last minute without fully understanding the various options available to them, including a Pension Maximizer.
WHAT IS A PENSION MAXIMIZER?
Retirees are frequently not aware that they could be giving up as much as 5 to 30 percent of their pension income in order to provide a survivor benefit. This reduction is basically a form of life insurance premium payment on the retiree's life.
Retirees can often secure the life insurance necessary to provide a survivor benefit more economically on an individual basis than through the pension plan's joint life option.
A PENSION MAXIMIZER allows the retiree to select the maximum, life-only retirement benefit and provide a survivor benefit outside the retirement plan, through individual life insurance.
WHAT ARE THE BENEFITS?
A PENSION MAXIMIZER can benefit the retiree, the spouse, and their families in several ways, including:
- The retiree receives a higher monthly retirement benefit for life.
- Cost of living increases will be based on a higher retirement benefit.
- If the spouse dies before the retiree, the smaller joint life option has not been selected unnecessarily.
- Life insurance proceeds are free from federal income tax. Retirement benefits are fully taxable.
- Life insurance cash values are available for emergency purposes before or during retirement.
- In the event of death of the retiree's spouse, the policy can be surrendered for its value or continued with another beneficiary.
- In the event of the simultaneous death of the retiree and spouse, life insurance proceeds are paid to the contingent beneficiary. Retirement benefits would terminate.
Retirement can be the greatest years of your life, but it is important to start planning now.
