I placed this question on Bogleheads and they thought I was an insurance agent. I had to explain that I was just a regular consumer. Anyhow, since this is an actual insurance forum, I thought I would ask folks here since you probably are more familiar with pension maximization.
Here is my scenario. Should I buy life insurance or take out one of the joint survivor options when I retire. I have about 10 years to go and want to make sure that my wife and I will be able to live comfortably in retirement. I am 52 and she is 38 She has about $90,000 in her 401k and IRA's combined. I have about 40K in mine. We have a home valued about $500,000 in today's market and my mortgage still have 20 years on it. We both have longterm care.
Should I buy life insurance or take out one of the joint survivor options when I retire. Here are the numbers. If I take out the single annuity option I would receive $9786/month or $117,432/year. I have 3 options to provide my wife with a joint survivorship benefit. I can give her the 100% option where we would both get 7861/mo or $94,332/year. Or the 75% option where I would get 8383/month or $100,596 and she would receive upon my death $6287/month or $75,444 or I can choose the 50% option which would give me $8828/month or $105,936 and she would receive upon my death $ 4414/month or $52,968/year. My pension has a 2% simple benefit adjustment factor that they provide each year. It is not a compounding COLA. However, they do make adjustments to ensure that they purchasing power of the pension stays at 80%. I understand what that means, but don't know the specifics. It is documented though.
I have read about pension max, but I am not sure if it would be a good thing in my situation or not. I want to make sure she is ok. If I reach 75 should would only be 61 so she will have quite a few years left maybe 25, 30 or more. Taking the single annuity seems like a great idea but not a wise move for her. Sure I would save $23,000 a year if I did that but I don't think I can get an insurance policy that is going to provide her with the kind of income she could get from one of the options.
I would like to know your thoughts on this. I have been approved for a guaranteed premium no lapse UL policy with AVIVA for about almost $600,000. I need life insurance any way in case something happened to me tomorrow. I would use the 10 pay of $1000/month to pay it off right at retirement. I would choose option 3 and give her the 4414/month or option 2 the 6287/month. I will let her contribute the max to roth iras first and then whatever she can to her 401K. I contribute the max to a roth ira as well. My wife will probably work until I am able to reach 65 so we won't have both of us needing to pay for medical insurance.
My other thought is taxes. My pension will will have her taxed to death when she is single with no kids. (Of course, if I kick the bucket early on she will more than likely have a new boyfriend. :-) ) I am thinking that the roths building up, the life insurance not being taxable except the interest on its earnings that she should be ok. If the plan were to go well she would only have to worry about the mortgage and my pension with either option would cover that each month after taxes. She would have no monthly bills unless she created them.
The other side of this is should I just take the first option take the $92,333/year and know that she will get the same and forgo the life insurance and just invest that $1,000/month premium for ten years?
I get sick thinking about it.
Here is my scenario. Should I buy life insurance or take out one of the joint survivor options when I retire. I have about 10 years to go and want to make sure that my wife and I will be able to live comfortably in retirement. I am 52 and she is 38 She has about $90,000 in her 401k and IRA's combined. I have about 40K in mine. We have a home valued about $500,000 in today's market and my mortgage still have 20 years on it. We both have longterm care.
Should I buy life insurance or take out one of the joint survivor options when I retire. Here are the numbers. If I take out the single annuity option I would receive $9786/month or $117,432/year. I have 3 options to provide my wife with a joint survivorship benefit. I can give her the 100% option where we would both get 7861/mo or $94,332/year. Or the 75% option where I would get 8383/month or $100,596 and she would receive upon my death $6287/month or $75,444 or I can choose the 50% option which would give me $8828/month or $105,936 and she would receive upon my death $ 4414/month or $52,968/year. My pension has a 2% simple benefit adjustment factor that they provide each year. It is not a compounding COLA. However, they do make adjustments to ensure that they purchasing power of the pension stays at 80%. I understand what that means, but don't know the specifics. It is documented though.
I have read about pension max, but I am not sure if it would be a good thing in my situation or not. I want to make sure she is ok. If I reach 75 should would only be 61 so she will have quite a few years left maybe 25, 30 or more. Taking the single annuity seems like a great idea but not a wise move for her. Sure I would save $23,000 a year if I did that but I don't think I can get an insurance policy that is going to provide her with the kind of income she could get from one of the options.
I would like to know your thoughts on this. I have been approved for a guaranteed premium no lapse UL policy with AVIVA for about almost $600,000. I need life insurance any way in case something happened to me tomorrow. I would use the 10 pay of $1000/month to pay it off right at retirement. I would choose option 3 and give her the 4414/month or option 2 the 6287/month. I will let her contribute the max to roth iras first and then whatever she can to her 401K. I contribute the max to a roth ira as well. My wife will probably work until I am able to reach 65 so we won't have both of us needing to pay for medical insurance.
My other thought is taxes. My pension will will have her taxed to death when she is single with no kids. (Of course, if I kick the bucket early on she will more than likely have a new boyfriend. :-) ) I am thinking that the roths building up, the life insurance not being taxable except the interest on its earnings that she should be ok. If the plan were to go well she would only have to worry about the mortgage and my pension with either option would cover that each month after taxes. She would have no monthly bills unless she created them.
The other side of this is should I just take the first option take the $92,333/year and know that she will get the same and forgo the life insurance and just invest that $1,000/month premium for ten years?
I get sick thinking about it.