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...He refuses to take the spouse benefit...

This may not be all his decision. In many states you will have to sign any papers that don't take this option. There will probably be stacks of papers that will be signed upon retirement; some will need to be signed by his spouse. Don't sign any that you don't understand. Think about it, if a couple in your situation were to get divorced, the spouse would probably get half the pension so you probably have a huge say if how the pension is paid, possibly even a veto on not taking the spouse benefit. Check the yellow pages or the internet for a lawyer that will do telephone consultations so you can get your questions quickly answered and just pay with a credit card.

If you plan on insuring him to offset the pension choice then get the insurance policy before you sign any papers on the pension. I would be surprised if a person on disability to whom working longer is not an option(because of health?) who is probably in around 60, will be able to get affordable life insurance. Just because you get reasonable quotes for it does not mean they will actually issue a policy after he has his insurance physical.

After paying taxes on the pension, inflation, and the loss of any earning of the money it takes to buy the extra year of pension befit, I would guess that the payback period is probably closer to ten years rather than five years.

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