Page 5 - Know-So Money, Hope-So Money, Retirement Secrets Wall Street Doesn't Want You to Know

Have Your Cake, and Eat It, Too

Sometimes it seems like retirement is a never-ending series of
choices...bad choices. For example, if you have a pension, you may
need to choose between a single-life payout which dies with you, vs. a
joint-life payout that would continue to pay your spouse if you

pre-decease him. This is a common choice faced by most people with
pensions.

The problem is you can end up paying a lot for a benefit you never
receive, unless you have a “pop-up” feature in your pension. What am I
talking about? Assume you have a pension that pays you $2,000 a

month for life if you take it life only, but only $1,800 per month if you
take the joint and survivor option. That’s a total cost of $2,400 per year.
But it doesn’t matter, because you want to be sure your spouse is okay
should you die first.

But what if he dies first? Now you’re stuck for life with a 10%
reduction in income because you elected a benefit you can never
receive. Worse, if you BOTH die, ALL the money disappears and goes
back into the pension fund. This can be a huge cost to your family.

How much? If you were going to receive $2,000 per month for the rest

of your life you would probably have funded your pension for a while,
say 30 years, and the value of the holdings would be around $360,000.
So, you collect your pension for three years and then you and your
spouse perish in an auto accident. Suddenly you’ve lost all the money
you’ve accumulated over a working lifetime, because instead of going
to your estate, the balance in the contract goes back to the plan to help
cover other lives.