You've put your time in and now you've had enough!
Before you leave your employer, some very important decisions need to be made; how do you structure your income payout from your pension. What is the best option for you?
It will be different for everyone. Here are some questions to ask yourself:
- How stable is your company or municipality. It is no secret that many public pensions could be in jeopardy due to overspending, mismanagement of funds, loss of revenue (foreclosures hurt-if you're not paying your mortgage, you're likely not paying your property taxes).
- Are you willing to permanently part with a portion of your pension to provide a spousal benefit? Boomers are expected to live 25-35 years into retirement. That's a lot of lost wages if you take the reduced payout option.
- On the flip-side 25-35 years is a long time to go with no pension if you choose a life only option and die too soon, leaving your spouse under-protected.
- Should you consider a pension maximization program which basically allows you to take a higher payout with no spousal benefit, then supplement with a life insurance policy on the pensioner if he or she dies first. This can give you many years of maximum income to spend, especially if you are both relatively healthy. However, the numbers may not make sense if you are rated or a smoker.
- Are you healthy? Consider each partner's health and the lifestyle you envision for your retirement?
- Are you planning to work part-time or perhaps start a business?
- What other income sources do you have? Could your investments sustain you if you experience a market loss, especially early on?
It is wise to meet with your trusted advisor who should be able to do an analysis and run all the numbers and scenarios. Only then can you make an educated decision on what feels best for you and your spouse.
If you need help, we're here to listen.
Kathy
Family Focus Financial Group (732) 364-5462
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