Strategy Of Single Life Annuity
Let us first look at some simple hypothetical examples using David and Marsha as a couple. Upon Retirement, David’s Employer Benefits Department presents him with these choices.
1. Single Life Annuity Income payout - $3500.00 per month upon death of Annuitant with no spousal benefits
2A. Joint Life and Survivor Annuity - Full Pay out- $2700.00 per month until death of both beneficiaries
2B. Joint Life and Survivor Annuity - 60% Payout - $2900 per month -- Followed by Survivor Benefit $1740.
3 Cash Lump Sum $525,000
David and Marsha had lost nearly 45% of their 401K and IRA savings in their stock market portfolios over the last 10 years. As a result, they find their retirement money will be much tighter than anticipated. They will need every dollar they can squeeze out of their pension so they are looking for some new fresh ideas.
The $3500 per month, Single Life Annuity looks attractive to David but no way could he leave his wife Marsha, six years younger than he, with only her small $1000.00 a month Social Security Check.
He considers the $2700 option but realizes that would not accomplish nor provide for the lifestyle they wish to have as a couple who living their retirement years together. It would certainly help bring security to his surviving wife but would deny him hundreds and thousands of dollars they need to live on today.
Taking the money $525,000 and cashing out is not a consideration for David. He has had nothing but losses and frustrations with the markets and no longer wants the ups and downs.
Knowing what David and Marsha’s needs are and their concerns … a helpful agent suggested he apply for a Life Insurance Policy that upon his death would pay out to his wife a stream of income equaling what she would have received if they had chosen the Joint Life and Annuity with a 60% Survivor Benefit pay out. This strategy would allow him to receive:
• A $3500 a month income stream from the Single Life Annuity earning David and Marsha $600 more per month than the Joint Life and Survivor Annuity with a 60% Pay out. They could take that $600 and purchase a $250,000 - $350,000 private Life Insurance policy from a reputable insurance company for an approximate cost of $250 to $300 per month. At minimum that would give an increase to their net disposable income by $300- $350 dollars per month. This would position them to maximize David’s pension dollars in today’s economy and fulfill his goal to provide security for his wife in the future. This should be everyone’s goal.
This strategy may not work for you if you are not in average to good health. However, I encourage all pension beneficiaries to review your personal employee benefit options and look at what the advantages may be for you if choosing a Single Life Annuity with a Life Insurance policy to protect your surviving spouse or family member.
1. Single Life Annuity Income payout - $3500.00 per month upon death of Annuitant with no spousal benefits
2A. Joint Life and Survivor Annuity - Full Pay out- $2700.00 per month until death of both beneficiaries
2B. Joint Life and Survivor Annuity - 60% Payout - $2900 per month -- Followed by Survivor Benefit $1740.
3 Cash Lump Sum $525,000
David and Marsha had lost nearly 45% of their 401K and IRA savings in their stock market portfolios over the last 10 years. As a result, they find their retirement money will be much tighter than anticipated. They will need every dollar they can squeeze out of their pension so they are looking for some new fresh ideas.
The $3500 per month, Single Life Annuity looks attractive to David but no way could he leave his wife Marsha, six years younger than he, with only her small $1000.00 a month Social Security Check.
He considers the $2700 option but realizes that would not accomplish nor provide for the lifestyle they wish to have as a couple who living their retirement years together. It would certainly help bring security to his surviving wife but would deny him hundreds and thousands of dollars they need to live on today.
Taking the money $525,000 and cashing out is not a consideration for David. He has had nothing but losses and frustrations with the markets and no longer wants the ups and downs.
Knowing what David and Marsha’s needs are and their concerns … a helpful agent suggested he apply for a Life Insurance Policy that upon his death would pay out to his wife a stream of income equaling what she would have received if they had chosen the Joint Life and Annuity with a 60% Survivor Benefit pay out. This strategy would allow him to receive:
• A $3500 a month income stream from the Single Life Annuity earning David and Marsha $600 more per month than the Joint Life and Survivor Annuity with a 60% Pay out. They could take that $600 and purchase a $250,000 - $350,000 private Life Insurance policy from a reputable insurance company for an approximate cost of $250 to $300 per month. At minimum that would give an increase to their net disposable income by $300- $350 dollars per month. This would position them to maximize David’s pension dollars in today’s economy and fulfill his goal to provide security for his wife in the future. This should be everyone’s goal.
This strategy may not work for you if you are not in average to good health. However, I encourage all pension beneficiaries to review your personal employee benefit options and look at what the advantages may be for you if choosing a Single Life Annuity with a Life Insurance policy to protect your surviving spouse or family member.
