Brian Gruss Licensed Insurance Planner

Increase Your Retirement Income with Pension Maximization

Most people try to hedge their bets when it comes to their finances, and planning for retirement is no exception. The goal is usually to earn the maximum return possible on the money we invest. One way to accomplish this is through a concept known as Pension Maximization. You should explore this strategy with Brian Gruss if you plan to use pension income to generate your retirement income, because Pension Maximization may allow you to increase your monthly payments.

When a couple decides to start drawing on their company pension, they generally choose a joint and survivor option, which will provide a monthly income until both spouses die. The amount of your monthly income is based on how long an actuary thinks both of you will live based on your current age. The longer both of you are expected to live, the lower the monthly income.

With Pension Maximization, you can reverse this. Instead of opting for a joint and survivor payment, you take the single life, or straight life, option. Since the insurer is only providing income for the life expectancy of one person, the monthly income will be higher than that provided by the joint and survivor option. You also will receive a higher income because you aren’t receiving a term, or period certain, guarantee with this option.

However, if the covered spouse dies suddenly, monthly payments stop. To compensate for this risk, you can use some of the additional income-the difference between the higher monthly income that the straight life option pays and the lower monthly income of the joint and survivor option-to purchase a life insurance policy on the covered spouse. So, guaranteed ongoing income for the surviving spouse is provided through the life insurance policy instead of through the deceased spouse’s pension. Even though the survivor loses the pension income, he or she has the death benefit from the life insurance policy, which can be used to purchase an income annuity that provides a monthly payment. And it’s likely that the survivor is now much older, so he or she may be able to generate a higher income due to a decreased life expectancy.

So far we’ve only discussed what happens if the person covered by the pension dies first.  But what if their spouse dies first?  With a traditional joint and survivor option even when one spouse dies the other spouse continues to receive the same monthly check.  But with the Pension Maximization strategy, the covered spouse now has the option to either keep the life insurance policy, perhaps for estate liquidity or charitable purposes, or surrender it and receive any cash value. Plus they’ll have the higher income provided by the single life pension option for the rest of their life.

Keep in mind that this Pension Maximization strategy doesn’t work in every instance especially if the covered spouse is not likely to qualify for life insurance based on their health history.  In any case, before you make an irrevocable decision regarding your pension payments, please give us a call to learn if Pension Maximization is right for you.

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Why You Must Evaluate Your Life Insurance Policy Before Retirement

Having sufficient insurance coverage is essential for every family’s financial security. Most people know that they must have a life insurance plan that can help provide for their family in the unfortunate event that the policyholder dies. It is easy, however, to think you are sufficiently covered just because you bought a policy several years or even decades in the past. Everyone’s life changes as they grow older, so you simply cannot take it for granted that the coverage you purchased long ago is sufficient to meet the needs of your family today.

One life change that it is easy to overlook when it comes to insurance planning is retirement. Just because you have successfully raised your children and have built up a solid nest egg does not mean you should ignore your life insurance coverage, and there are several reasons why you want to take a look at the amount of your life insurance coverage once you reach retirement.

First, retirement almost always means that any life insurance provided by your employer will disappear. At the very least, your coverage will be reduced significantly. To make up for this loss of coverage, you will need to consider increasing the death benefit of your current personal coverage.

Secondly, inflation means that you will have to review your policy limits on a regular basis to make sure the coverage remains sufficient to meet current needs. Inflation is particularly devastating to those on a fixed income, and you want to make you’re your survivors have enough funds to take care of their future needs.

Finally, there will be a drop in retirement income for your surviving spouse in the event of your death, and you need to prepare for this eventuality. An extended illness could also deplete your savings, so ensure your coverage is enough to cover any outstanding medical bills.

There are a variety of factors that will affect your life insurance costs, not the least of which is your age. Speaking with Brian Gruss a qualified insurance professional is the best way to obtain the most coverage for the lowest cost; thus, it is important to solicit their advice as you review your life insurance. In any case, you should never let retirement become an excuse to ignore your insurance plans, and the sooner you review your policy, the better prepared you will be for the next important stage of your life.

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Planning for Retirement: Considering Long Term Care Insurance as an Option

When it comes to retirement planning, long term care insurance is not one of those subjects most people want to address. Nobody likes to think of themselves as suffering from the infirmities associated with age or illness. Therefore, many times, this kind of insurance is relegated to the “back burner” so to speak.

People tend to think that long term care insurance is an unimportant topic until they’re faced with possibly needing it. However, this is the time such a decision is unwise as you will most likely stand a very good chance of not being able to qualify.

Making the choice when you’re younger and in better health is a more prudent approach to your overall well-being.  There may likely come a time when you’ll be glad to have coverage for your assisted living needs.

Probably the best way to determine when to purchase long term care insurance is to contact an insurance professional. He or she can advise you as to the consequences of waiting to purchase such an insurance plan, and how it can affect you later when you may need the services assisted living provides.

Unfortunately, research points out that most of us will need this type of care when we’re older. Also, statistics show that most of us will be living past 80 or 90. This fact alone makes long term insurance an important consideration with regards to our quality of living in our later years.

Of course, we all enjoy our independence as younger adults, but you are at least guaranteed some future independence financially by opting for this type of insurance plan. Naturally, you hope you will never need to use your auto coverage or homeowner’s coverage either. Still, to be without such financial security can wreak havoc in your life if you’re not covered.

Long term care insurance is mainly designed for middle income people. If you’re extremely wealthy and don’t believe you will be under any imposition paying for assisted living, you may consider this insurance plan non-applicable. Likewise, if you are eligible for Medicaid, this insurance probably isn’t a consideration either.

Nevertheless, for the rest of us, long term care insurance offers a solution for any future care we may need, and provides us with the assurance that our care can be met.  Give me a call and we will look at all of the available options and choose a plan that’s right for you.

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