Choosing which pension option is best for you and your partner is quite necessary. Of course, this only applies if you are already married and had just retired from your current job. During your retirement, you will be granted your pension benefits which would depend upon the type of pension plan you opted for. If you opt for a life-only annuity payout, the income you will be receiving would stop once you die. This would mean that you will be putting your partner in a tight situation once you are already gone. To prevent this from happening, you therefore need to think carefully about which plan you should be opting for and which pension benefits would best fit for the both of you.
Importance of choosing pension benefit choices
There are several pension benefit distribution choices which you can choose from. These choices include the following:
- Single Life
- 50% Joint and Survivor
- 100% Joint and Survivor
- Life with 10 years certain
If you happened to choose the Single Life option, you will only be receiving a pension income for as long as you live. Once you die, the benefit will stop and no additional funds will be paid out. So if ever you are married, your partner won’t be able to receive any survivor benefits from the plan you choose.
If you go for a 50% Joint and Survivor option, your partner will be receiving 50% of the total pension income you are receiving on a monthly basis once you die. The benefit he/she will receive will continue for as long as he/she lives. The third option, which is the 100% Joint and Survivor plan, will entitle you and your partner to receive the same amount for as long as either one of you is still alive. So basically, if you are receiving $1000 per month as your pension income benefit, your partner will also receive the same amount once you die.
The next option means that a monthly payment is guaranteed to be paid out for a minimum of ten years and will continue for as long as you live. So if you die, the payment would continue for up to ten years from the first payment you received. If you manage to live for 20 more years, then the payment would continue.
No matter which of these options you will opt for, it is necessary to plan ahead of time as to which could benefit the both of you best. Moreover, discussing your plans with your partner will help you easily decide which plan will work for you.
What trade-offs would you make? How much in monthly income are you willing to forgo so that your significant other (in many cases your spouse only) can continue to receive that same amount through their life? The question brings more questions, and no solid answers. So what would you do?