Pension Maximization

Strategies which may provide greater flexibility, options and control than your existing pension options:

Pension maximization refers to a strategy for choosing a payout option at the time of your retirement. Employees near retirement age may be faced with a rather difficult decision when presented with the retirement plan payout options. Most pension plans will offer the participant at least two common payout options: single-life payout or joint-life payout. Under the single-life payout, your pension check will be higher—but it stops at the time of your death. Under the joint-life payout option, the pension check will be smaller—but it continues to pay even after your death, to your spouse. So, if your spouse outlives you, he/she will continue to receive your pension check until their death.

The first option maximizes the retirement income from your pension or profit-sharing plan while you’re alive, but benefits cease upon your death. Should you elect this option at retirement and die shortly thereafter, your spouse may be left with no source of continuing income.

The second option provides a smaller retirement benefit while you are both living, but assures that your spouse receives an income in case you die first. But, in many instances, if your spouse dies before you, you will continue to receive the lower pension benefit for the rest of your life, even though your spouse never received any income. It's a difficult decision to make. Fortunately, there may be an additional choice called Pension maximization.

Pension maximization may allow you to select the higher single payout while also providing income for your spouse in the case of your death. It may also allow you to pass that retirement asset to your beneficiaries as opposed to losing the asset at death.

Is Pension Maximization Right for You? It depends on a number of factors, such as your financial situation, health, objectives, and the options and benefits you have under your employer’s retirement plan. We can review your unique situation and assist you with your decisions and in developing the strategy that is most appropriate for you.

To discuss your options and obtain a better understanding of how the pension maximization strategy works, call 973-285-1040 or email me to schedule a no-obligation consultation.