Life Events

Survivor benefits are payments or income that continue to a spouse or other beneficiary after the person who earned them dies. They are easy to overlook while you are focused on your own retirement income, but they can make a major difference to the person left behind.

Pension survivor options

When you retire from an employer pension, you usually must choose how it is paid. A single-life annuity pays the most each month but stops when you die. A joint and survivor annuity pays somewhat less while you are alive, but continues all or part of the payment to your spouse afterward. Federal law generally requires qualified plans to offer a spouse a survivor benefit unless the spouse gives written, notarized or witnessed consent to waive it.

Points to weigh:

• The difference in age and health between you and your spouse.
• Whether your spouse has other income or a pension of their own.
• The survivor percentage offered, which might be a half, two-thirds or the full amount.
• Whether the plan offers a pop-up feature that restores your higher payment if your spouse dies first.
• Your other resources, including life insurance, which some people use instead of a survivor option.

Social Security survivor benefits

Social Security provides benefits to eligible widows and widowers, and in some cases to divorced spouses, children and dependent parents of a worker who has died. Eligibility and amounts depend on the worker's earnings record and the survivor's age and circumstances. Benefits are not automatic, so they must be applied for. Details are at ssa.gov.

Retirement accounts and insurance

• IRAs and 401(k)s: Your beneficiary designation determines who inherits. A surviving spouse often has additional rollover options.
• Life insurance: Review the beneficiary and the amount of coverage in relation to the survivor's needs.
• Annuities: Some contracts offer survivor or period-certain guarantees at a cost.

Steps to take

1. Request benefit estimates and survivor options in writing from your plan administrator.
2. Ask for a comparison of each payout choice.
3. Discuss the choice with your spouse before you decide, since many pension elections cannot be changed later.
4. Check that beneficiary forms are current for every account and policy.
5. Keep a list of benefits and contact details where your family can find it.

Tax angle

Survivor pension payments are generally taxable in the same way as the original payments, and a surviving spouse's filing status may change after the year of death, which can affect tax rates.

If you are choosing a pension option or reviewing your family's protection, reach out to us and we will go through it with you.