Monthly Retirement Payout Options: February 2010 Archives
Retiring Government Employees - Educators, City, County, & State Employees- now have an additional option to consider when they are choosing retirement payout options, one that could put more money in their pockets on a monthly basis.
Most government sponsored retirement plans are Defined Benefit plans - meaning your retirement income is a percentage of the salary you made during your working career. At retirement time, you choose from several options as to how you receive your retirement income.
There are 6 or more choices of payout methods, but the 2 most popular choices are:
Some retirees choose to take the Maximum Payout Option and purchase insurance on themselves which will pay their beneficiary after their death. This concept, called "Pension Maximization" in the insurance industry, has lost favor in recent years. Higher Interest rates are needed to generate large returns on a lump sum death benefit and interest rates are currently very low.
This concept could be coming back into favor with the introduction of a version of life insurance which pays the death benefit out to the beneficiary monthly for life. The pricing is based on both the insureds age, gender and health status plus the beneficiary's gender and age.
The pricing for this is very competitive when compared to traditional lump sum life insurance.
In most instances where the retiree is female with an equal-age and/or older beneficiary, there is enough dollar difference between the Maximum Monthly Payout and the Joint & Survivor Monthly Payout amount to more than pay for the insurance premium. Female retirees, therefore, can choose the Maximum Payout amount, buy the insurance, and pocket the difference for a net increase in retirement income.
Visit our website for more information:
www.maxpensionplan.com
John Hartline
800-562-8019
Most government sponsored retirement plans are Defined Benefit plans - meaning your retirement income is a percentage of the salary you made during your working career. At retirement time, you choose from several options as to how you receive your retirement income.
There are 6 or more choices of payout methods, but the 2 most popular choices are:
- Maximum Payout choice, which pays you the most for as long as you live, but payments stop at your death, leaving nothing for any beneficiary.
- Joint & Survivor choice, which pays a lesser amount to you until your death and then continues to pay your beneficiary (if still living) an amount for his/her life. This option is chosen by the vast majority, so that their dependents are provided for.
Some retirees choose to take the Maximum Payout Option and purchase insurance on themselves which will pay their beneficiary after their death. This concept, called "Pension Maximization" in the insurance industry, has lost favor in recent years. Higher Interest rates are needed to generate large returns on a lump sum death benefit and interest rates are currently very low.
This concept could be coming back into favor with the introduction of a version of life insurance which pays the death benefit out to the beneficiary monthly for life. The pricing is based on both the insureds age, gender and health status plus the beneficiary's gender and age.
The pricing for this is very competitive when compared to traditional lump sum life insurance.
In most instances where the retiree is female with an equal-age and/or older beneficiary, there is enough dollar difference between the Maximum Monthly Payout and the Joint & Survivor Monthly Payout amount to more than pay for the insurance premium. Female retirees, therefore, can choose the Maximum Payout amount, buy the insurance, and pocket the difference for a net increase in retirement income.
Visit our website for more information:
www.maxpensionplan.com
John Hartline
800-562-8019
