Have you ever tried to decide which survivor benefit is best for your situation? If so, you’ll know that it can be difficult because of the number of options available, the consideration of your current assets and facing your own mortality. So, what do you do? Many people have found success by taking it one step at a time and engaging a professional.  This post will give you the steps to take in order to start the selection analysis of your survivor benefit.

  • Step One: Facing your own mortalityThis isn’t the most fun thing to do but a necessity.  We all have an ultimate end date to our lives. We just don’t know when it will be. The best thing to do is to look at your family history and see at what age your parents, grandparents, etc. passed away, then take into account your own current health condition. According to the Associated Press1, “Americans who were 65 in 2018 can expect to live another 19 years and six months, on average.” With the advancements in the medical community, many people may live longer than age 84, so be sure to take that into account as well. Once you have identified your life expectancy, move onto Step Two. 

Step Two: Assessing your current assets

Your pension may not be sufficient to cover your entire annual income needs during retirement; therefore, your own assets may be needed to supply the difference.  Do you have enough saved to provide the additional income needed? Is it enough to supply you additional income through retirement? These are questions that will need to be answered.  You can use two basic rules of thumbs as a starting place to figure this out. 

  1. Multiple by 252 – estimates how much money you’ll need in retirement by multiplying your desired annual income by 25. For example, if you want to withdraw $40,000 per year from your retirement portfolio, you need $1 million dollars in your retirement portfolio. ($40,000 x 25 equals $1 million.)
  2. 4% Rule2 – assumes your investments earn at least a 4% real return and provides the amount of money you can withdraw annually without dipping into your investment principal. Using the example above, if you retire with $1,000,000 in your portfolio, then you would withdraw $40,000 in your first year of retirement. ($1,000,000 x 0.04 equals $40,000.) In subsequent years, the amount to withdraw should be adjusted for inflation.  

Step Three – Knowing your options

It’s important to know what your pension survivor benefit options are.  Your personalized website inside Lockheed’s LM People, will allow you to estimate your pension benefits and see the variety of options available for your survivor benefit. Follow this path to get there: LM People > Pay and Benefits > LM Employee Service Center. Once inside, generate the reports to see the following survivor benefit options: Single Life Only, 100% survivor, 75% survivor and 50% survivor.  

  1. Single Life Only – this is the amount you, the retiree, would receive for your lifetime and your pension payments would end at your death. This is the largest pension benefit available and provides no residual income to your spouse.
  2. 100% Survivor – this is amount you, the retiree, would receive for your lifetime and if your spouse survives you, then he or she would continue to receive the same pension payment until his or her death.   This is the lowest pension benefit available, but provides the most residual income to your spouse.
  3. 75% Survivor – this is the amount you, the retiree, would receive for your lifetime and if your spouse survives you, then he or she would continue to receive 75% of your pension payment until his or her death. 
  4. 50% Survivor – this is the amount you, the retiree, would receive for your lifetime and if your spouse survives you, then he or she would continue to receive 50% of your pension payment until his or her death. 

Once you have gathered your pension survivor benefit options, calculated your current assets and needs, and determined your life expectancy, you’re ready to start analyzing your overall situation to see which survivor benefit option fits your best or you’re ready to find a professional to analyze it for you.  Either way, at least you have the first three steps completed. 

For more tips like these, click here to sign up for our weekly email blog newsletter. If you would like to get better educated on Lockheed retirement strategies, click here to download our Free Report titled Retire with Confidence: The Top 4 Things You Can Do Now to Maximize your Lockheed Retirement. And, if you want to have face time with a Lockheed Retirement Specialist², you can click here to schedule an appointmentclick here to sign up for our Lockheed Retirement Workshop or click here to just give us a call (817) 210-3444.

Be sure and check back next week for more incredibly valuable information. Cheers!

Disclosures*

Financial Planning and Investment Advisory offered by SWMG, LLC a Registered Investment Advisor.

Lockheed Martin Retirement Specialist is not an official title or professional designation nor is it conferred by Lockheed Martin on any individual or company.

Our Complementary consultation and free report are for informational purposes only and provided free without any obligation to utilize or retain our investment advisory services.

SMWG, LLC is not affiliated with or endorsed by Lockheed Martin Corporation. Our expertise comes from working with LMT employees for several years and helping them to retire with confidence.

Investing involves the risk of loss, including loss of principal. Past performance does not guarantee future results. Investment products are not FDIC insured, have no bank guarantee, and may gain or lose value. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be profitable for a client’s investment portfolio.

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