A defined-benefit pension, which promises a certain benefit at retirement usually calculated through a formula based on a combination of years of service and amount of pay, can be paid in several different ways. When you or your spouse retires, you will be asked to elect or choose the type of benefit that you want.
Joint and Survivor Benefit: Monthly payments based on your lifetime and your spouse’s lifetime. This means that should your spouse die before you do, you will continue to receive survivor’s benefits from your spouse’s pension.
Once you have waived the benefit, the decision is final. Don’t sign away your rights unless you understand what you are giving up.
Sometimes you have a choice of whether the surviving spouse will receive 50 pecent or 75 percent of your pension benefit. There may be other choices. If so, make sure you understand what they are. Ask the pension plan administrator how much you would get under each option or type of benefit that you can choose.
People are often tempted to select the lifetime benefit because it pays the highest monthly benefit. But remember: it will be paid only while your spouse is alive. And if the pension includes retiree health benefits, these may stop too if you are widowed or a widower.
A Survivor's Benefit Example
Think about your personal circumstances and decide how much each of you would need as a survivor. Consider also how that might change if your health or other circumstances might change.
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© 2013 Women's Institute for a Secure Retirement. Republished with permission. All rights reserved.