Pension Maximization, in short, is defined as making the most of your survivorship benefits – it enables you to take your full pension benefits at retirement while using a life insurance policy to replace the lost benefits to your spouse should you pass away first. When implemented properly, a Pension Max strategy can save money, provide flexibility and give you control of your survivorship benefits.
Traditionally, if you are married and eligible to receive a pension from your company you will have to decide from one of the two options:
Single-Life Option: Take your full pension benefits at retirement, leaving your spouse without any of the benefits should you pass away before they do.
Joint and Survivor Option: Take less than your maximum pension benefits at retirement in exchange for continuing benefits to your spouse at your death. This option may also offer the choice for your spouse to receive generally 50% monthly benefits at your death.
It’s not an easy decision, however, Pension Maximization offers an alternate option that can make a significant difference. In general, Pension Maximization could be an appropriate choice if you want to supplement your pension benefits and can afford to pay the insurance premium.
Although the concept is fairly simple, Pension Maximization is not the right choice for everyone. You owe it to yourself and your family to understand your options, do the analysis and find out of it makes sense for you. Contact Kenvin Financial Services so we can work with you to analyze your situation and find the best solution for you and your family.