retirement

Your pension when the unexpected happens

What if you want more income for your spouse?
What if you want to leave a higher income to your spouse? © Monkey Business Images/Shutterstock.com

The average defined benefit pension plan offers between four and 10 payout options, estimates actuary Wendy Foster, senior vice president of defined benefit product management for Fidelity Investments, one of the nation's largest providers of defined benefit plans. Picking the payout option that will provide the largest stream of income over the duration of two lives is a very personal decision that can be complicated by such things as age disparity between spouses.

"You can't know what the most generous option is until you look back, and you have to be dead to do that," Foster says.

Her advice to a couple looking to generate enough income throughout both lifetimes is to make sure that there is a guaranteed income stream -- from the pension, Social Security, an annuity or a combination of these -- that is sufficient to cover basic living expenses no matter how long both live. "After that is in place, then a couple can look at other sources of income to pay for the extras," Foster says.

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