14 Jan Planning Your Pension with Retire 804.com
Retire804.com can help you understand your pension options. We will give you a quick introduction to the three pension types, how they differ in your monthly take-home pay, and how each will affect your spouse if you were to pass. Again, the numbers will be estimates, as exact values will differ based on a variety of factors. Visit Retire804.com and print out our pension estimate letter, which can be sent to Atlanta to receive an official pension estimate in writing. This article illustrates values based on a member being fully vested in the plan and reaching full retirement age, as defined by the plan. Full retirement age is reached with 25 years of service with 55 years of age, or 30 years of service regardless of age. However, only full-time employment counts towards this credit. Part-time years are credited to a different pension system.
Types of Pension Plans
The Max (Ten-Year Guarantee)
The “max plan” commonly referred to as the 10 Year Guarantee, will provide the maximum benefit to the member, currently $4,000 a month. This is a pre-tax value, and will be paid to the member during his or her lifetime. This option offers a 10 year guarantee in the event the member passes within the first 10 years of retirement. In a case where a member passes away within ten years of retirement a named beneficiary will continue to receive $4,000 monthly payments until the 10 year anniversary is reached. For example, if a member chooses this option and passes in year 2, a named beneficiary will continue to receive payments for an additional 8 years. If the member chooses this option and passes in year 11, then the $4,000 monthly income will stop because it is beyond the guaranteed period of 10 years or 120 months.
When determining the spousal options the ages of both spouses are used to calculate the benefit. Since the spousal options are now ensuring two lives the benefit will be less than the maximum benefit offered. However, in the event the member predeceases their spouse, the spouse will then continue to receive monthly income for the rest of their lives.
50% Spousal Option
For a member and spouse of similar age the 50% spousal option may provide the member with an approximate monthly pension income of $3,700, pre-tax. If the member predeceases the spouse then the spouse would be entitled to 50% of the pension or $1,850 a month, pre-tax for the rest of the spouses life.
75% Spousal Option
For a member and spouse of similar age, the 75% spousal option may provde the member with an approximate monthly pension income of $3,200, pre-tax. If the member predeceases the spouse then the spouse would be entitled to 75% of the pension or $2,400 a month, pre-tax for the rest of the spouses life. Notice that the member’s penison income is reduced (compared to the 50% spousal option), but the the beneficiary’s pension is increased.
The above examples are for illustration purposes only. To get your exact amount please print out the pension estimate letter, complete the form, and mail it to us or directly to Atlanta. Also, with the spousal option(s) there is no 10-year guarantee. If the member passes in year 1 or year 20 the surviving spouse will be entitled to 50% or 75% of the pension benefit.
If you are preparing for retirement, stop by for a visit. We would be happy to help ensure you enjoy your retirement. We hope we see you soon!