It is always discretionary to anticipate the unexpected, and plan accordingly. While there is time, forethought takes a back seat on an aggregate for most investors. While planning for the retirement, the plan subjective to specific goals, such as ensuring survivor income for one’s spouse, often gets missed. “While there are 36% couples who haven’t thought of a retirement plan, there are more than 47% couples who disagree on the type of planning”, says a Fidelity Investment Survey.
Learn more about pension benefit choices for couples
There are several variables and schemes which can be taken into consideration depending on your personal level of income and how much you want to keep aside.
Retirement planning strategies:
To ensure the benefits of survivor income for your spouse it is essential that some readjustments be made and the retirement planning is done under ‘Spousal IRA or 401(k).’
Spousal Individual Retirement Account is a type of retirement plan in which the working spouse contributes to the plan to ensure retirement savings for the non-working spouse. But there are certain rules to be abide by, which can be rummaged through intricately with the help of financial planners.
Here is more information Spousal IRA
401(k) is the retirement plan which is contributed to by both the working partners according to their income levels. This type of retirement plan ensures survivor income to the spouse who is the living.
Choose from pension distributions:
While planning for the retirement, there are pension benefit plans which will ensure that your spouse continues to receive survivor income and not left stuck in contingent financial situations. The following options can be delved into:
- 50% Joint or Survivor: In this type of pension plan, you will receive the total amount of the pension monthly, whereas your spouse will receive 50% of it after you pass away for as long as they survive.
100% Joint or Survivor: Under this pension plan, both you and your spouse will keep on receiving the amount opted for, for as long as either of you is alive.
- Life with 10 years certain: Under this scheme the payment of however much you have optioned for will be given to you as long as you are alive, even if it is 20 years or so, but if you do pass away before the expiry of 10 years, your spouse will be passed on the benefit for up to 10 years.
Just a little prompt:
It is vital that your loved ones are secured after you are not there so that they do not face lousy financial crunches after your demise, so:
- Do not opt for single life option on your pension because if you encounter a situation where you are no longer alive under single life option, the benefits will immediately stop. Opting for joint life option will allow the spouse to become the beneficiary.
- Select the survivor benefit form of life insurance which will allow your spouse to receive your social security benefits after you.
- Update your beneficiary’s name as your spouse’s in your 401(k) so that the income can be passed on to your spouse after you are not there.
It is crucial to ensure your spouse’s financial benefits after you are not there. To secure this, there are several plans and strategies which can be opted from. Rummaging through the options can help corroborate lack of finances for the spouse.