Watch out for this Retirement Blunder….
Henry Montag, CFP, CLTC | April 11th, 2009
You’re excited today is the day you’ve been waiting for. You have an appointment with the person who will give you and go over your Retirement Packet with all your financial information. You’ll see exactly what you can expect to get each month you’re retired.
If you’re married you’ll have 2 choices. You can get a higher monthly payout for yourself , but once you pass away your spouse receives nothing, known as a “Life Only. Or you can choose a reduced payment while you’re alive but this will allow 50% of your income to continue on to your spouse, after you pass away, known as a “Joint and Life Survivor Option”.
You’ll then be asked to choose which option you want, sign the papers and your monthly payment will start within a few weeks.
Congratulations, You’ve just made the Most Common and Costly Retirement Blunder . What you should have done is take that piece of paper with all the numbers on it and set up a follow up future appointment . In the meanwhile you should do your homework by yourself or with the help of a qualified CFP or CPA to find out if the quote you were given is the highest amount you could get if you shopped it in the Open Annuity marketplace.
In most instances you will find that you can increase your monthly payment by as much as 10%, that’s 10% more income each month for the rest of your life regardless of which option you choose.
The reason being is that the person that gave you your info is just passing on to you what was given to them by their Pension Administrators . Its their job to prepare all the necessary paperwork to enable you to retire and for them to complete their fiduciary responsibility of concluding all necessary ERISA filings to get you paid and off their payroll records. Its not their job to shop around and get you the highest offer.
Rarely is the offer extended by the retirees company the best or highest that can be obtained. Unfortunately most retirees aren’t aware that they have this third choice available to them.
Competition is a wonderful thing if its best used to your advantage . Its therefore extremely important that you understand all your options and select the best option available to you. Remember you only have one chance at getting this right because once you make a decision its irreversible .
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Tags: financial planning, henry montag, retirement, retirement blunder, saving
About the Author: Henry Montag is an Independent Certified Financial Planner as well as a CLTC. He’s been in practice since 1976 with offices on Long Island, New York. He is a contributing writer for The Moneypaper, a national financial publication, been my sourced by Investors business Daily, Long Island Business News, Newsday, Wall St Journal, The Moneypaper,Investment News, Senior Lifestyles and has held insurance and securities licenses for over thirty years.
