As couples draw closer to retirement, the need to develop a plan that can provide sustainable and predictable income through their retirement years is critical.
Defined benefit plans or pensions have fallen to the way side for the vast number of individuals leaving them searching for options that can provide a guaranteed lifetime paycheck for not only themselves but for their surviving spouse.
Since the landmark Supreme Court ruling recognizing same sex marriages, the options of how an individual can designate spousal continuance of their retirement assets is key to the longevity of income for planning purposes.
Prior to the ruling, same sex life partners had limited options in leaving defined benefit plans or other assets with a guaranteed income stream to a non-spouse.
Due to many employers not offering traditional pensions, many pre-retirees are researching alternatives. An alternative that can provide a contractually guaranteed life time income stream is offered through insurance companies by the way of annuities.
Other than pensions, annuities are the only contractually guaranteed vehicle that will provide a stream of income not only for the owner’s lifetime but potentially for their spouse. The majority of insurance companies now offer spousal continuation of the lifetime benefits to same sex married couples.
As with any investment vehicle, an individual needs to thoroughly research the benefits and features offered by the insurance carrier along with cost associated with any additional features.
However, now that spousal continuation is available to same sex married couples it is an important discussion point to have with a qualified financial planner as to how these contracts could benefit in the overall income plan.
Same sex couples can also take advantage of Social Security Benefits. The timing of when and how any couple files for Social Security can greatly impact the amount of benefits they can receive during their life time.
Also, if one partner’s benefit is low, due to lack of years in the work force, taking advantage of a spouse benefit can provide additional income.
When the surviving spouse is eligible to receive survivor benefits, this continued income of the larger benefit can add longevity to the overall income plan. Same sex married couples are encouraged to contact Social Security to determine what benefits they are entitled to.
Cristina Acosta and Nancy Fromm are co-owners of Money Wise, a Scottsdale, Ariz.-based financial-planning firm that helps create retirement-income strategies for people nearing or in retirement. Acosta has been in the retirement-planning industry for 22 years and Fromm has 30 years of retirement-planning experience. Both are Series 65 licensed and are fiduciaries.
Investment advisory services offered through Brookstone Capital Management, LLC (BCM), a registered investment advisor. BCM and (Money Wise or Woman's Worth) are independent of each other. Insurance products and services are not offered through BCM but are offered and sold through individually licensed and appointed agents. Fiduciary duty extends solely to investment advisory advice and does not extend to other activities such as insurance or broker dealer services. Advisory clients are charged a fee for assets under management while insurance products pay a commission, which may result in a conflict of interest regarding compensation.
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