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URL:  http://boards.fool.com/we-wound-up-taking-part-of-the-money-as-an-31225063.aspx

Subject:  Re: Pension - lump sum or annuity? Date:  4/26/2014  9:28 AM
Author:  Hawkwin Number:  74878 of 76404

We wound up taking part of the money as an immediate annuity and the remainder as a lump sum which was rolled over into a retirement account. We also picked the option for recursion (if DW dies before me, I can go back to a single-life amount which is higher) and survivorship (the pension keeps going to her after I die).

And this is an often overlooked feature - and an often excluded feature.

I have found that in many cases, where the retiree is still relatively healthy, it can make more sense to take a life only with no survivor benefit and buy a 20-30 yr term policy so that if the retiree dies, the other spouse is provided a lump sum to replace the lost income.

Many times, the term life policy is cheaper than the difference between the life only amount and the survivor option amount. This solution allows the retiree to cancel their term policy if their spouse dies first instead - effectively creating a recursion option outside of the pension if such an option is not provided (which in my experience it is a rare option).
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