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Should a Survivor Annuity Be Part of Your Retirement Planning?
Total Comments: 12
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March 21, 2010
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Survivor or Insurance or Nothing
DOL
Tue Jan 26, 2010 12:38 AM
Post Reply
At age 59, I saved a little over $300.00 monthly by purchasing a small Survivor Annuity just for Health Insurance sake and a Term policy for 20 years. Now, three years later, it appears to have been a great move. Even today, my wife and I would do it over again as the insurance premium is certain and if I go first, she benefits and if she goes first, its academic......you are so right, each retiree's situation should dictate what's best.
Good Points
All Over
Tue Jan 26, 2010 5:40 AM
Post Reply
One takeaway is that if your spouse outlives you, does he/she have a health insurance option.
However, this is not always an all or nothing situation. If you even elect a percentage of survivor annuity, the spouse can still maintain FEHB coverage.
Simply Stated
USPS
Tue Jan 26, 2010 5:43 AM
Post Reply
How 'bout both a survivor's annuity and a term life policy? Covers all the angles, guarantees continued FEHB for spouse + the big bucks needed for everyday expenses. That's what we did, and she's glad we did. Two-two-two mints in one!
Re: Simply Stated
DOD
Tue Jan 26, 2010 10:31 AM
An insurance policy is going to have to be very big bucks indeed to provide for a spouse for all those years, because s/he will only get a fraction of your retirement income! Having both is a good idea if you can afford it.
Do NOT forget Long Term Care insurance. We all know that we will eventually die, but a stroke can leave you needing skilled care in a long term care facility. This can eat up a "nest egg" in just a few months. While medical science advances may keep you alive, but it cann be a miserable existence if the only place you can stay in is one that Medicare will pay for.
Pay for the coverage now, or pay in tears later!
Show me the numbers...
None
Tue Jan 26, 2010 7:21 AM
Post Reply
Unless you're a zillionaire sheltering wealth from death taxes, it is unlikely that life insurance will prove the answer. The average male live to age 80 these days. What would one think is the annual term life premium for an 80 year old male...when the actuary tables say it's a pretty good bet you're not going to be around much longer? So, buy a longer tterm contract, which really just equalizes the risk across several years, and eventually you'll need to renew (unless you've collected). And life expectencies are not likely to contract. In fact, medical gurus predict today's healthy 50 year old may have a life expectency of up to 125 years with the various advances in medicine, including those that will occur over the next three decades of contemporary lifespans.
CSRS +
FAA
Tue Jan 26, 2010 9:17 AM
Post Reply
Note that the decision for a survivor annuity is reversible should your spouse precede you. You can reapply for a full annuity. As CSRS, I chose a full survivor annuity (for FEHB for her) and also a 500K 20 year level term year life insurance policy. That should leave my spouse 55% of my pension and, with the term policy invested conservatively at 4%, an additional 20K per year.
Good answer
FAA
Wed Jan 27, 2010 7:03 AM
Post Reply
Thank you for the article.
Survivor Annuity
The Chief-Civil Service Leader
Thu Jan 28, 2010 5:37 PM
Post Reply
A survivor annuity is superior to the purchase of life insurance. There are simply too many unknowns for the vast majority of people to forego the suvivor annuity in favor of purchasing life insurance.
Q.: In light of stock market returns over the past 10 years---can anyone document for us the superiority of the life insurance option?
Q.: If the average retired couple lives into their eighties will the survivor be "ready, willing and able" to manage the death proceeds? For most the answer is no.
Peace and Hope,
Joel L. Frank
Columnist
Current Pension Topics
The Chief-Civil Service Leader
732-536-9472