When you reach retirement, and if your company provides a pension program, you will be offered a number of payout options. Typically, they will be the Single Life and the Joint Survivor payout options. Single Life pays a higher monthly amount but stops paying once you die, whereas, the Joint Survivor will pay a lower monthly amount but will continue until both you and your spouse are deceased. This calculator will help evaluate total payout amounts under both scenarios given specified life expectancies.
Which Should I Choose?
If you are a single person, you may want to consider Single Life pension payouts because you’ll get a larger amount per month for the entirety of your life. However, there are other situations where you may wish to consider whether single pension payouts make sense. If you have dependents, for example, the money from your pension may be important.
If you’re married, you may wish to consider joint survivor pension payouts so your spouse continues to get money even after you’re gone. However, you need to consider whether the smaller payouts make sense for you. For example, the smaller payouts may not make sense if they are not enough to survive on. There may be other options, as well, such as to:
- Keep working and set aside money your spouse may use
- Create an investment portfolio for your spouse’s income
- Create a passive source of income for your spouse
- Take out a life insurance policy
- Create an income plan for your spouse for the long-term
You may also consider that your spouse may need a smaller amount when it is just one person rather than two paying for living expenses. If you have other sources of income, besides a pension, that extra cash may make up for the drop in income.
In addition to the Single Life pension and joint life pension distribution, some pensions are divided to give the survivor 50% of the pension. You’ll get a pension for as long as you live, and once you’re gone, your spouse will receive 50% of the payment you both received. This can be an alternative that allows you to get more in pensions while you live, but ensures your husband or wife is not left with no pension. Some pensions also offer a lump sum or onetime payment — you’ll want to see whether your pension offers these alternatives.
One way to evaluate which option is right for you and your household is to use the Money Help Center free calculators to evaluate your pension, Social Security benefits and other costs. Our calculators also help you evaluate how much you need to save for retirement.
Other Pension Considerations
When you plan for your pension and retirement, make sure you consider the fine print. If your company changes hands or goes bankrupt, is your entire pension guaranteed, or only a portion? If there are still many years before you retire, a great deal can happen to the market and to your pension.
You will also want to consider whether your pension alone will be enough for retirement. Will you also need savings or other options? Money Help Center free calculators can help you figure out how much you need for your golden years.