Jupiter, FL financial advisor Cary Stamp briefly outlines an innovative Pension Maximization strategy that can add a huge lump sum to the assets you pass on to beneficiaries.


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TRANSCRIPT:

I am Cary Stamp with Cary Stamp and Company. This is a Principled Wealth Moment. And if you’re somebody that has a pension, maybe you worked for the government or you work for a large corporation, then I’m talking to you today. And the reason I’m talking to you is because a lot of people don’t realize that they have choices when they have a pension; and one of those choices is that they can take their pension as a cash settlement to their beneficiaries, even if the company that they worked for didn’t even offer that. Let me explain how.

When you take your pension from your employer, you have a number of different choices. The first choice is just take the money that they’re going to offer you for your life only. It pays a set amount every single month, it pays for the rest of your life and when you’re gone, there’s no more payments. So let’s assume that we have a 65 year old person and their life only payment just for them is $4,000. But if they wanted to add their spouse to be a beneficiary of the pension when they’re not here, they get a lower payment. That’s called a Joint Life Benefit and the Joint Life Benefit to add the spouse, so the pension pays for both lives is $3,200. What does that mean? That means that if you want to add your spouse to your pension, you give up $800 every single month. $800 a month times 12 months a year is $9,600 to put your spouse on the pension.

But what if there’s another way that we could look at? What if we take the life only pension, get the $4,000 a month, and we take the $9,600 and we spent it on life insurance on a 65 year old person. If you’re in reasonably good health, that could buy approximately $1,000,000 in life insurance on a permanent basis. So when you pass away, your spouse will not get your pension payment every month, but they will get a check for 1 million bucks. And for most people, that million dollars will easily last for the balance of the spouse’s life. It also gives you the ability to take a stream of payments that otherwise there would be nothing left for your beneficiaries and turn it in to a lump sum of money.

If you haven’t considered this option, you’re welcome to give us a call. (561) 471-7700 I’m Cary Stamp, and this has been a Principled Wealth Moment.