topic Re: Pension Beneficiaries...? in Among Friends

Pension Beneficiaries...?

Starpolisher — Thu, 18 Jun 2015 11:58:07 GMT

I will be retiring this moonth. I have the opportunity to make my two grown sons my beneficiaries so that they would each get $ every month in the event of my death for the rest of their lives from my pension. They are in their early thirties. One is married and expecting his first child. They both are doing well at this time but I'm sure some help down the road won't hurt. My question is this: I can do this with them or DH. DH has his own pension and really does not need mine. DH won't live as lon as DS's(expectedly) I will get less money for myself to live on but this is not the problem. Should I aim for more $ while I'm alive so I can help out when needed and then they onlly get life insurance $ or set it up so they can get money for the rest of their lves? Of course we don't know when we will die. Would like opinions. Please don't bash - I come here in hopes of getting wisdom and advice from those hopefully wiser than myself and maybe "been through it" or just have a different perspective on things.TIA

Re: Pension Beneficiaries...?

Suzeecat — Thu, 18 Jun 2015 12:24:47 GMT

Personally, I would seek advice from a trusted professional. There are so many variables that the average person might not even think to consider.

That said, I'm thinking (and I am by no means any kind of professional in this regard) it would be better for you to take as much as you can up front. The pension is money that YOU worked for that YOU are entitled to enjoy however you see fit. If you have taught your children to be responsible and have good money skills they will have the rest of their lives to plan for their own future. By the time they're in their 30s, your job is done. The rest of your life is for YOU.

Re: Pension Beneficiaries...?

Vabelle — Thu, 18 Jun 2015 12:26:35 GMT

Advice: Receive the max payout, and have no beneficiaries.

I retired early in May, and awaiting first SS check this July, but will not collect pension for a few more years. I will not have any beneficiaries to my pension since a sensible financial advisor mentioned that "All you will be worried about in the future is how much money you will be receiving ea. month" .... (meaning get the most you can due to our weak economy). As with most children, their salaries will be more than parents ever made, and in your WILL you can leave anything you desire to kids & grandkids. Also, you can "gift" them $14,000 yearly tax free as per IRS. Best wishes to you!

Re: Pension Beneficiaries...?

Mominohio — Thu, 18 Jun 2015 12:36:38 GMT

Vabelle's advice is good.

I have seen many retirees in my family live another 30 or more years after retirement. And while the retirement seems good the first 15 years or so, the money wasn't keeping pace with increased medical costs incurred, or with the increased cost of living in general, in the later years.

Many think that they have more than enough at the beginning of retirement, but as those years go on, and the health goes down, things can change, and not for the better.

My personal opinion would be to max out what you get, and set aside what you don't need to leave them for later, or help them out when they might need it while you are still living and choosing when and how to help.

I'd not worry too much about their long term future at this point in your life, as that has now become their responsibility. Anything you can leave them is great, but don't short yourself now to do so, or even worse, cut things too closely by taking a cut now, that may make you a financial burden on them later, when they are trying to raise their own families.

Re: Pension Beneficiaries...?

AnikaBrodie — Thu, 18 Jun 2015 13:42:14 GMT

Assuming you have a retirement counselor please discuss your options with him/her and consider their advice. Make your decision based on what is best for you and your family. You might also want to discuss this with a financial planner or your CPA.

I am retired and chose "partial retirement" based on my family situation at that time. In retrospect I would choose "full retirement." I also chose to collect Social Security starting at 62, and I'm fine with that decision.

Best wishes on your upcoming retirement. You'll love it ... Enjoy.

Re: Pension Beneficiaries...?

Nataliesgramma — Thu, 18 Jun 2015 14:09:12 GMT

I agree with Mominohio....

I am due to start receiving my pension checks in 3 months. I would take full retirement. You can always invest some of it for the future or your children in a way you will be able to choose.

There is no guarantee any pension fund won't run out of money sometime in the future...

Re: Pension Beneficiaries...?

surfk — Sun, 28 Jun 2015 01:59:12 GMT

(deleted by poster)

Re: Pension Beneficiaries...?

PamfromCT — Thu, 18 Jun 2015 15:05:33 GMT

Hi Starpolisher and other posters! Such great advice given here. As a retired couple, our goal is to remain financially independent for the rest of our lives. Hope it happens that way, as we don't ever want to be a burden to our children.

That said, you can always give to your children now "with a warm hand." We have two little darling grandchildren now and appreciate we can help out with buying them clothes, taking them on day trips that aren't cheap, etc.

I give you credit for asking for advice. More people should do that! All my best.

Re: Pension Beneficiaries...?

Chrystaltree2 — Thu, 18 Jun 2015 16:34:18 GMT

I can only speak for myself on this issue. It might not be what you want to hear but that doesn't make it bashing. The way I look at it is that if I retire at 66, I can reasonably expect to live another 25, perhaps 30 years. Hubby and I have always worked hard, saved and prepared for retirement. Elders today don't just live longer, they live healthier and active lives. Our goal is to live well and to have the money to do the things we want to do. So, taking a reduced benefit for any reason at all is simply not an option. In particular, we would never in million years reduce our retirement income so that our adult children could collect something. We aren't wealthy people, no one knows what the future will bring, so that would be a foolhardy thing to do. We took care of our two adult children by paying their college tuition so they could go into well paying careers. Which they both did. One daughter is married and we paid a subtantial part of the wedding costs. We put the same amount aside for our other daughter. She's free to have it for a wedding someday or she can have it for the downpayment on a house or condo. That's it! They are on their own. They have what it takes to build their lives. We did well by them. Now it's time for Mum and Dad to look out for each other. What's ours...is ours.

Re: Pension Beneficiaries...?

Kalli — Thu, 18 Jun 2015 16:38:09 GMT

I'm reading this thread with interest because this decision is coming up for me next year.

I plan on taking the most I can take up front. But I do have to decide whether to make my DH, who's 3 years older, a beneficiary or not. Truly, he doesn't need the money. We will have my pension and income from investments through his business to fund retirement. Will see what to do when the time gets closer.

I'd say, do not name your sons as beneficiaries. Your monthly pension will take a bigger cut due to them being so young - they'll be projected to live much, much longer than you which puts a major dent in what you recieve each month. And it's been mentioned that you don't know how secure your pension fund will be going forward.

As others already said, you can gift them money, put $ into a fund similar to a 529 for your grand kids' college expenses, or whatever need you feel they may have in the future.

Re: Pension Beneficiaries...?

KailaS — Thu, 18 Jun 2015 16:55:16 GMT

I retired not quite two years ago. I do not have a pension, but I do have a 403b. When I left my job, I had two choices: (1) to put someone on the account as a co-recipient, which would cut back on what I receive now) and (2) to name a beneficiary of money left after my death. I chose the second option. Since retiring, I developed two kinds of cancer. I also developed several other problems. I need my retirement money to cover drugs (I am in the donut hole now) and to help me continue to live more comfortably. If money is left when I die, it will go to beneficiaries, but I encourage you to put yourself first.

Re: Pension Beneficiaries...?

this is my nic — Thu, 18 Jun 2015 20:55:41 GMT

DH and I thought we'd be set for retirement. We don't live lavishly at all, don't go out for meals: vacations are few and far between. Unfortunately, we are still working past normal retirement age. Keep as much $$ as you possibly can because you may find you'll need every penny.

Re: Pension Beneficiaries...?

Allegheny — Fri, 19 Jun 2015 01:07:33 GMT

@chrystaltree wrote:
I can only speak for myself on this issue. It might not be what you want to hear but that doesn't make it bashing. The way I look at it is that if I retire at 66, I can reasonably expect to live another 25, perhaps 30 years. Hubby and I have always worked hard, saved and prepared for retirement. Elders today don't just live longer, they live healthier and active lives. Our goal is to live well and to have the money to do the things we want to do. So, taking a reduced benefit for any reason at all is simply not an option. In particular, we would never in million years reduce our retirement income so that our adult children could collect something. We aren't wealthy people, no one knows what the future will bring, so that would be a foolhardy thing to do. We took care of our two adult children by paying their college tuition so they could go into well paying careers. Which they both did. One daughter is married and we paid a subtantial part of the wedding costs. We put the same amount aside for our other daughter. She's free to have it for a wedding someday or she can have it for the downpayment on a house or condo. That's it! They are on their own. They have what it takes to build their lives. We did well by them. Now it's time for Mum and Dad to look out for each other. What's ours...is ours.

Chrystaltree, you and I think a like on this subject. My DH and I have no children so may-be I never developed the thought process that a lot of people with children do, ie., that they feel they need to leave an inheritance to their heirs. If I had children, the only thing I would want to ensure is that they never had to contribute to my financial support in my old age.

When I was a young adult, I told my parents to enjoy their money. I watched them go thru hardships while I was growing up and I felt they deserved to take life a little easier after retirement. Both my parents were gone before I was 40 and while I inherited some of their estate, any child will tell you that they would rather have their parents alive with them then inheritance in the bank.

Re: Pension Beneficiaries...?

Still Raining — Fri, 19 Jun 2015 01:18:49 GMT

My actual advice would be to see a professional about this decision.

However, in the course of my career I had to look at a lot of pension plans and retiree health insurance plans and I hope you are aware that their funding is based on a number of assumptions that may or may not come true. There is not a pile of cash sitting there with your name on it. Most of your pension payouts have not even been set aside by the company. So my personal opinion is to get all you can as fast as you can.

Re: Pension Beneficiaries...?

homedecor1 — Fri, 19 Jun 2015 02:34:24 GMT

My 2 cents both spouse and I had this type of option. We both decided our children would have other assets from us upon our death (which I will say was more than our parents ever did for us). My boys both have pretty good lives. We have 1 GD and if they need anything for her they can't afford we always pitch in (like extra daycare expense, summer camp, etc.) my other son is moving into his 1st home and we are helping to paying closing costs for them. I felt it would be better to help them them while alive because really that little bit they would receive each month wasn't that terrific.

Re: Pension Beneficiaries...?

Kachina624 — Fri, 19 Jun 2015 02:52:47 GMT

I was faced with this question when I retire as a state employee. I had no husband and one son. Call me selfish if you will but I figured, with no other income, I needed all I could get so elected not to have son as beneficiary. As it turned out he died unexpectedly a few years later so I made the right decision. I don't think a parent owes a child a lifetime income and should make him or herself as comfortable as possible in retirement. Of course if the child was incapable of supporting himself it might be a different story.

Re: Pension Beneficiaries...?

Starpolisher — Fri, 19 Jun 2015 11:57:05 GMT

Thanks everyone for your advice! I have decided to not make my DS's my benificiaries. However, I don't think I will max out my monthly (state) pension but leave a small monthly amont to DH. Not sure yet as he has his own railroad pension and also some investments. Thanks again. I really appreciate the advice.

Re: Pension Beneficiaries...?

151949 — Fri, 19 Jun 2015 17:44:03 GMT

@Still Raining wrote:
My actual advice would be to see a professional about this decision.

However, in the course of my career I had to look at a lot of pension plans and retiree health insurance plans and I hope you are aware that their funding is based on a number of assumptions that may or may not come true. There is not a pile of cash sitting there with your name on it. Most of your pension payouts have not even been set aside by the company. So my personal opinion is to get all you can as fast as you can.

ITA - when we retired we took our pension funds as cash payouts, and added them to our IRA fund. We draw a monthly payout from that toward our living expenses. So many people we know are having their monthly pensions greatly reduced because congress just passed a law saying they could do that. ( You get who you vote for). Some friends of ours are losing 40 % of their monthly pension.

Re: Pension Beneficiaries...?

Johnnyeager — Fri, 19 Jun 2015 18:27:47 GMT

I just wanted to point out that the pension cuts approved by Congress relate to Multi-Employer Plans. Those are the types of plans that unions have negotiated with various employers within one industry. Some of these are in financial trouble so the benefit redutions will help the plans remain solvent. The Teamsters for example have such a fund.

If you work for a private company that has its own defined benefit plan it may be in good shape. Check for the funded status of the plan. Employers are required to give workers covered by the plan an annual statement of its status.

Re: Pension Beneficiaries...?

Kachina624 — Sat, 20 Jun 2015 05:19:04 GMT

"ITA - when we retired we took our pension funds as cash payouts, and added them to our IRA fund. We draw a monthly payout from that toward our living expenses. So many people we know are having their monthly pensions greatly reduced because congress just passed a law saying they could do that. ( You get who you vote for). Some friends of ours are losing 40 % of their monthly pension."

Unless you have reason to believe the plan under which you retire is not sound, this is usually not recommended. I could have withdrawn the money I had in my employers retirement fund. Almost no one does that. I've been retired since 1998, and have already been paid many thousands more than I had in the retirement fund.</B></B>