Joint Survivor Annuity Choices

[Blackdog Lin]

Well, gwendolyn gives me more credit than I deserve. Lifetime probability did not enter into my calculating. I have based everything on the fact that either one of us could drop dead tomorrow.

(1) I could live comfortably (if simply) on my pension, especially since I would spend a year clearing this place out, having a big auction, and selling out. The place is worth a nice amount. Already I am struggling with 2 of us (one a disabled DH) taking care of 7 acres, a pond, the tree rows, the house repairs, etc. I KNOW I'm not interested in trying to take care of the place by myself.
(2) DH's social security is enough less that he would probably struggle to pay the bills, AND he would never stir himself enough to get the work done to sell out and move and have the proceeds available to supplement his income. If I go first, I see him eventually dying with our nice house and property sagging down around him with myriad minor repairs left undone.

So for our case, life insurance on me was the way to protect him, and saves us monthly income at the same time. It wouldn't be the right answer for everyone.

[jp1]

We're both in our 40's and neither has a pension so we're not discussing this but let me throw out another option. I have no idea if it's possible or logical, but what about looking into buying a term life policy on DH and taking the smaller, or no, survivor benefit. If the premium on the life insurance is less than the drop in his pension benefit would be if you took the higher payout now that might work.

[Teacher Terry]

This works great when you have no health issues so the rate is cheap. NOt so good if that is not the case.

[CathyA]

Blackdog Lin was really smart with doing her math, including probability calculations. (Didn't anyone else have to study that in high school or college?)

Cathy, I don't know your personal financial situation (as opposed to your DHs), but I am constantly amazed that people even ask this question. (And it's almost always traditional couples where the wife has had significantly less income and is younger.) I can't imagine why, when women live on average 14 years longer after their husband dies -- possibly much longer, and with much higher costs of living due to age and living alone or in special care facilities... why any Dear Husband would even think of leaving his wife with no survivor benefits.

I've been wanting to shout this one from the rooftops for over 5 years! I've known too many true stories; husbands taking years -- more than three decades for my uncle -- of full benefits, not saving/reinvesting any of it, and then dies suddenly while wife is left literally destitute, even the last checks being clawed back by the annuity fund once they find out about the death, just as she's trying to figure out how to pay for a funeral...

Assume you will live well past your husband, and if you don't, well then he should just plan on living a very long time after you go so he gets all the value he can out of the annuity! That's a much safer bet than the other way around.

It's not like there were only 2 choices.........there were 5. I wanted some feedback from people who had been through this.
DH has a big life insurance policy and should he pass before me, he will also have a very good social security amount which I would also get. We also have been putting the maximum allowed into IRAs.
It may have made sense in this instance to let him take the full amount, which would stop when he died. But I couldn't stand thinking that should that happen, any of his pension would just stop. So we chose the survivor 50% option.
Gwendolyn, maybe some of us took different courses than you did.
Thanks to all who helped to answer my question.

[Teacher Terry]

We had 5 choices too when we retired. Glad you made a decision.

[iris lilies]

Now that DH is 65, he will receive a retirement benefit from a place he worked at quite awhile back. We have to choose what type of Joint Survivor Annuity pay-out we want. Unless you're extremely rich, it's really difficult to know which one to choose. If we had a crystal ball, we would know which would be best to choose. But nobody knows how long they have. DH was tempted to get the high paying one (which isn't a joint survivor thing). Of course, if he lives a long time, this would be the best choice! But even if we are both fairly healthy, you just never know.......you could slip on a banana peel tomorrow and die. (something my father always said).

There are several choices.......the 10 year certainty one; the spouse gets 66%; the spouse gets 50%; and one other that I can't remember (he took the papers with him to work). I suppose the biggest thing to consider is how we are financially, going into our "golden years". (Who the hell dreamed up that phrase?). Right now, we're thinking the joint choice where he would get the most, while I would get the least if he should die might be the best. It still isn't the biggest amount he could get without the joint survivor choice, but it's just so hard for me to encourage him to go with the biggest pay-out. It's great if he lives 10-20 years more.......but if should die tomorrow, I would hate to see neither of us get any of what he earned and deserved.

Sorry if I'm a little vague on this stuff. I find it pretty confusing.
It's just a crapshoot, I guess.
Any suggestions?

Getting back to this after a few days.

We are taking the "ten year certain" option since it's only a 3% reduction from full out annuity payment. Probably, though (and this is a very general guess) it will encompass about 30% of our annual income.

[Packy]

Find a need, and then meet it. I'd suggest maybe moving up to Hummolt, and open up a cannery specializing in making pizza sauce in restaurant-size containers. Maybe a vineyard, too. Then, bottle your own label of wine. There is an ever-increasing segment of premium wine consumers in the 50-up female category. So cater to 'em. That'll be your retirement income stream. Thankk Mee.