{"id":3104,"date":"2019-01-21T20:05:06","date_gmt":"2019-01-21T20:05:06","guid":{"rendered":"http:\/\/strategic.fixedincomeaid.org\/?page_id=3104"},"modified":"2023-10-12T11:38:49","modified_gmt":"2023-10-12T15:38:49","slug":"pension-maximization","status":"publish","type":"page","link":"https:\/\/poolelocke.com\/financial-services\/pension-maximization\/","title":{"rendered":"Pension Maximization"},"content":{"rendered":"

[vc_row full_width=”stretch_row” content_placement=”middle” css=”.vc_custom_1551211741759{margin-top: -90px !important;padding-top: 0px !important;background-image: url(http:\/\/poolelocke.fixedincomeaid.org\/wp-content\/uploads\/2019\/02\/green-bak.jpg?id=3592) !important;}”][vc_column width=”1\/2″][vc_empty_space height=”47px”][vc_single_image image=”3137″ img_size=”full” alignment=”center” style=”vc_box_circle_2″ css_animation=”rotateInDownLeft”][\/vc_column][vc_column width=”1\/2″][vc_column_text]Pension Maximization is a strategy to help get the most out of defined benefit pension plans for married couples. With this strategy, a life insurance policy is purchased on the life of the plan participant prior to retirement. It may be purchased closer to retirement, but because of age and possible health issues, purchasing the policy sooner may be in the client\u2019s best interests.<\/p>\n

The participant\u2019s spouse is named as the beneficiary of the life insurance policy. The life insurance policy\u2019s death benefit would seek to match an amount that would replace the benefits for the surviving spouse as if the Joint and Survivor benefit option was selected.<\/p>\n

At retirement, the plan participant selects the Life Only <\/strong>benefit option in order to receive the larger benefit amount. With the larger benefit, the participant will use a portion of the pension benefits to invest in a guaranteed vehicle, designed to match the benefit that would be provided for the beneficiary spouse.[\/vc_column_text][vc_empty_space height=”47px”][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]<\/p>\n

The goal is to provide the spouse with the same benefit amount as if he or she elected the Joint and Survivor benefit option while the extra funds not used for the guaranteed investment provide the plan participant with a larger, \u201cmaximized\u201d pension benefit. When the plan participant dies, a guaranteed benefit \u2013 which is generally income-tax-free \u2013 is paid to the spouse beneficiary. The benefit can then be used to replace the lost pension income resulting from the plan participant\u2019s death. This can be accomplished by taking the benefit proceeds as a life settlement option, using the benefit proceeds to purchase an annuity, or using other savings vehicles.<\/p>\n

Pension Maximization can be a strong strategy for teachers, federal government employees, and state and municipal employees. It can also be good for married individuals who participate in defined benefit pension plans and are comfortable using a portion of their pension benefit to fund a personally owned, guaranteed vehicle.<\/p>\n

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Maximum Pension Income<\/h4><\/div>

By selecting the Life Only option, the plan participant receives a larger benefit. Should the spouse die first, the participant isn\u2019t left with a reduced benefit should he or she have chosen the Joint and Survivor option. Under this scenario, the participant may also access his or her cash values to further help supplement their retirement income. <\/p><\/div><\/div><\/div>[\/vc_column][vc_column width=”1\/3″ css=”.vc_custom_1551211432160{background-color: #000000 !important;}”]

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Benefit for Plan Participant\u2019s Spouse<\/h4><\/div>

When the plan participant dies, the spousal beneficiary receives the benefit (generally tax-free), which replaces the discontinued pension income. <\/p><\/div><\/div><\/div>[\/vc_column][vc_column width=”1\/3″ css=”.vc_custom_1551211641204{background-color: #000000 !important;}”]

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Possible Inheritance for Heirs<\/h4><\/div>

If the spouse predeceases the plan participant and the guaranteed vehicle is kept in force until the plan participant\u2019s death, he could change the beneficiary designation to his heirs and then the plan\u2019s death benefit would pass to them. <\/p><\/div><\/div><\/div>[\/vc_column][\/vc_row][vc_row][vc_column][vc_empty_space][\/vc_column][\/vc_row][vc_section][vc_row full_width=”stretch_row” css=”.vc_custom_1548099189754{background-color: #58585a !important;}”][vc_column][vc_row_inner][vc_column_inner][vc_cta h2=”Call or email our office today to set up a FREE FINANCIAL ANALYSIS!<\/strong>” txt_align=”center” shape=”square” style=”flat” color=”turquoise” add_button=”top” btn_title=”Schedule an Appointment” btn_style=”flat” btn_shape=”square” btn_color=”success” btn_size=”lg” btn_align=”center” btn_css_animation=”fadeInDown” btn_link=”url:http%3A%2F%2Fpoolelocke.fixedincomeaid.org%2Fcontact%2F|||” css=”.vc_custom_1551211715499{background-color: #58585a !important;}” btn_el_class=”h3″]<\/p>\n

302.439.0733<\/span><\/h2>\n

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