Retirement stories: How two customers chose survivor options
Your pension takes care of you and your partner during your retirement. If you pass and that income goes away, what happens to your partner?
To help you understand survivor options, we’re sharing stories that show how two couples considered their future. Their names and jobs have been changed for privacy reasons, but their decisions and financial situations are real.
Tom and Diane are ready to be retirees. Diane’s TRS pension payment is higher than Tom’s, so if she passes first, they need to make sure that Tom has enough monthly income. Watch Tom and Diane talk through their thought process and share which option they choose.
PERS retiree Von and his wife Ester had a different situation. Learn how their choice helped create a safety net for Ester in the event Von passed first.
Protecting your loved one
Choosing a survivorship option for your plan helps ensure that if you die first, your spouse or partner has a source of income for the rest of their lives. With a survivor option, you take a smaller monthly pension payment during your retirement, and your loved one can continue to receive a lifetime monthly payment after you’re gone. There are four options:
Option 1: Single Life
- Pays the highest monthly benefit, but the benefit ends with your death. If you die before receiving the total amount of your contributions plus interest, that remaining balance will be paid in a lump sum to your beneficiary.
Option 2: Joint and 100% Survivor
- You receive a reduced monthly benefit, and after your death, your survivor receives the same monthly amount for the rest of their life.
Option 3: Joint and 50% Survivor
- Your monthly benefit is slightly higher than Option 2, and after your death, your survivor receives half of your monthly amount for life.
Option 4: Joint and 66.67% Survivor
- Your monthly benefit is between Options 2 and 3, and after your death, your survivor receives two-thirds (66.67%) of your monthly benefit for life.
How to choose
When choosing a survivor option, consider your other sources of income, health and life expectancy, expected expenses, and how your taxes and cost of living may change after one person passes away.
The higher survivor option payment, the more it will lower your monthly pension while you’re alive. Which one is right for your family depends on your overall financial picture. If your partner passes before you, you can revert to the unreduced single-life amount of your monthly pension.
What if there’s still a gap?
In the videos, both couples used additional DRS savings accounts like DCP or their TRS Plan 3 investment fund to purchase a DRS annuity. The monthly funds from their annuities will help provide additional lifetime funds for each couple. Annuities also come with survivorship options and may also offer Cost of Living Adjustments (COLAs).
You can log into your online account and use the DRS pension benefit estimate calculator to see what your pension amounts would be with each survivorship option.
Additional resources
Videos:
Purchasing an Annuity & Service Credit
Benefit Options- Single, Joint & Survivorship
Withdrawals from Washington State DCP-Deferred Compensation Program
Podcasts:
Gen X: Never Too Late to Start Saving for Retirement
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