What Is Pension Maximization?

Pension maximization is a retirement strategy for couples that involves opting for the highest possible annuity payout for one spouse's lifetime while obtaining life insurance to provide income for the surviving spouse.

Pension maximization involves the use of two retirement income products: a life-only annuity a benefit option selected fr༒om the pension, which will offer the highest cash payout for one individual but stops when that individual dies, and life insurance, which can provide income to the surviving spouse.

This is a risky strategy. Retirees may choose a safer 澳洲幸运5开奖号码历史查询:joint-and-survivor annuity, which guarantees a benefit ꦗfor li🃏fe to both spouses.

Understanding Pension Maximization

The higher payout of a life-only annuity can be attracti🐬ve for some couples, given that the risk of such a strategy may be reduced with a life insurance policy. The rꦺeasoning is that the increased payout of the life-only annuity may provide more than enough extra income to pay the premiums of the life insurance policy. There are, however, many details to consider.

Couples who participate in an 澳洲幸运5开奖号码历史查询:employer pension plan may consider pension maximization. Insurance agents may suggest a strategy to couples for whom the pension 澳洲幸运5开奖号码历史查询:annuitant is in good health or if the couple h🐓as other sources of income to balance the risk of choosing a life-only annuity structure.

The longer the higher payments of such an annuity are made, the more profitable it is for the couple. However, if the individual who is due the pension is likely to die soon or relatively soon, then a joint pe🍃nsion or joint-and-survivor benefit would be the best choice.

Pension Maximization Reasoning

With pension maximization, if the annuitant dies first, the surviving spouse will receive a death benefit from the life insurance policy that should be enough for the survivor to purchase a guaranteed 澳洲幸运5开奖号码历史查询:fixed annuity. This could have a better monthly payoutꦍ than the survivor would get with the safer joint pension/joint-and-su😼rvivor annuity option.

In the event that the spouse who is not covered by the pension dies first, the surviving spouse can cancel the life insurance policy and continue to receive tဣhe higher life-only annuity payment.

Special Considerations

There are many important factors to consider before attempting this strategy, including the health of both spouses, other sources of income, the tax implications, and the specific terms of the couple's pension or medical plan.

The key to success with pension maximization is protecting the surviving spouse by providing them with a sufficient income in 澳洲幸运5开奖号码历史查询:perpetuity. Since such a strategy can be complicated and should be discusse⭕d with a licens🌠ed insurance professional, financial planner, or financial advisor.