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Pension Maximization

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Pension Maximization

Pension maximization is a retirement investment strategy that involves maximizing your pension amount through life insurance. In this strategy, a potential retiree who is contemplating between a single survivor pension or a joint survivor pension. The goal is to have the life insurance premium be less costly to the retiree than opting for the joint survivor pension option.

Case Study - Click to Open

Eugene retired after 31 years with The County.

When we sat down with Eugene after he received his preliminary pension numbers, we went over each option in detail to assure that we did our best to:

A.) Have Eugene and his wife Lorraine understand his options and
B.) Find the best option for him and Lorraine to maximize his pension.

Prior to us meeting with Eugene and his wife, they had the common dilemma which almost every civil service employee encounters when nearing retirement: Which option should I select? The Single Life Allowance (and use PensionMax) or the Joint Allowance (Full).

After our meeting, and understanding Eugene’s family’s needs, we were then able to go back to the drawing board and run some hypothetical examples of how PensionMax would work for him. The difference between the Single Life and The Joint Allowance was roughly $817/month.

So, when utilizing a PensionMax strategy, the logic is: Can I take the Maximum benefit and enjoy an increased benefit while both, my spouse and I are alive while simultaneously have something in place to supplement my pension if I were no longer alive? And the answer is:

Yes, as long as the proposed PensionMax candidate is healthy enough to qualify for Life Insurance.

So, after Eugene applied for Life Insurance and was approved, we then determined that a total monthly contribution of $500.00 would fund his Permanent Life Insurance Policy and an additional $127.00/month would fund his 10 year term policy. So, by using PensionMax, Eugene and his family were able to enjoy an extra $190.00/month for the first 10 years and then once the 10 year term policy expires, they would have a total of $317.00/month extra.

Is Pension Maximization for You?

The idea of taking full benefit of your pension through pension maximization certainly sounds great. But is it a good retirement investment strategy for you? If you are married and want to maximize the pension benefits you get, without compromising the financial security of your spouse in the event of your death, then pension maximization is a good idea.

To know if this strategy will really work for you, contact our financial advisors at Westchester Retirement Services.

Benefits of Pension Maximization

Here are some of the benefits that federal and state government employees can enjoy with pension maximization:

  • Pension maximization offers a viable solution to those who want to enjoy full pension benefits.
  • It ensures that the surviving spouse is provided for through the life insurance policy of the deceased spouse.
  • In case the spouse of the insured dies first, the insurance  beneficiary can be changed and the policy can still be paid out.

A pension maximization strategy can be ideal for you if you are in a dilemma of choosing between single and joint life policies. However, it is important to choose an insurance policy that will meet the financial needs of the surviving spouse.

Contact our financial consultants today to know more about the retirement investment plans that best suit your needs.

“Securities and investment advisory services offered through AXA Advisors, LLC (NY, NY 212-316-4600), member FINRA, SIPC. Annuity and Insurance products offered through AXA Network, LLC and its subsidiaries."