Pension maximization

Pension maximization,

Definition of Pension maximization:

  1. This is a risky strategy. Retirees may choose a safer joint-and-survivor annuity, which guarantees a benefit for life to both spouses.

  2. Pension maximization is a retirement strategy for couples that involves opting for the highest possible annuity payout for one spouse's lifetime while obtaining life insurance to provide income for the surviving spouse. Pension maximization involves the use of two retirement income products: a life-only annuity, which will offer the highest cash payout for one individual but stops when that individual dies, and life insurance, which can provide income to the surviving spouse.

  3. Investment strategy under which a married retiree opts for a single life annuity (that yields highest monthly payment but only while he or she is alive) a part of whose income pays for his or her life insurance (thus acts like another annuity). If the retiree dies before his or spouse, the annuity will stop but the life insurance will support the spouse. This scheme, encouraged by life insurance companies, is criticized by some because it is very expensive if bought just a few years before retirement.

How to use Pension maximization in a sentence?

  1. Pension maximization is a retirement strategy for couples whereby they choose the highest possible annuity payout for one spouse's lifetime while obtaining life insurance to provide income for the surviving spouse.
  2. Pension maximization requires a life-only annuity and life insurance.
  3. Pension maximization is a risky strategy. A joint-and-survivor annuity is less risky and provides benefits for life for both spouses.

Meaning of Pension maximization & Pension maximization Definition