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My husband and I recently received information from CalSTRS that we are eligible to change our selected benefit options, due to recent changes made at CalSTRS. The option we selected at retirement enables the spouse to receive 50% of the retirement benefit upon the member's death. We now have the opportunity to select the 75% option. My husband retired in 1999. (current age 69) I retired in 2002. (current age 64) There will be no fees for changing options. Because of our ages we will probably keep the 50% option on my benefit, which is the lesser of the two benefit amounts. Life insurance at 69 is very expensive, so the 75% option for my husband might make more sense. We do received a 2% COLA each year. I have run the numbers, but still have questions. Receiving only 50% of my husband's benefit could make it difficult to keep our house. Another factor to consider is the healthy longevity of all my family members. Assuming we can exist on 82% of my husband's benefit now, would this 75% option be a wise choice? I realize, we would basically be buying an annuity. Would it be better to pull the same amount out of his current retirement benefit and invest it in a balanced fund? Does life insurance make any sense at this age?
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