Wondering how to decide if I should reduce either or both of our pensions for a spousal benefit if one of us dies. How did any of you decide this?
I think it depends on your risk tolerance -- in particular, the risk tolerance of the surviving spouse. There is a pretty clear tradeoff: higher initial pension payment with no/limited survivor benefits means you can retire sooner (due to the higher income), but also means that you need more savings down the road to ensure that the survivor will have enough investments/SS to live on when you die. OTOH, lower initial payment + 100% survivor benefits means you probably need to work a few more years to save enough to cover the initial difference in income, but you don't need to worry about the survivor running out of money down the road, because one SS + pension usually provides a pretty decent non-poverty-level income.
For us, the latter is a no-brainer: my biggest irrational fear is ending up as a bag lady, and I'd rather work a little longer now, while I'm healthy and actually mostly like my job, than have to worry about what to do when I'm 90 and infirm. For me, I consider the full survivor benefit as basically longevity insurance. OTOH, others with a different situation could easily make a different choice. Just don't be short-sighted and focus only on the initial payment without considering what happens to your spouse down the road.
FWIW, I find the math easiest to deal with using the bucket method, i.e., looking at different periods of time as different buckets, based on differing income/expenses during each of those periods. So for example, we plan to quit around 58. So maybe 58-62 we live entirely on our own savings, so we need (projected annual expenses x 5 years) saved as of age 58 to cover that period. So you multiply it out, and then put the money in a present-value calculator to tell you what you need saved as of today to have that amount covered when you turn 58.
Then you repeat that for all of the other buckets. So say from 62-70 we will take one SS and the pension, so now we get to subtract that annual income from our annual expenses -- that means we only need to cover the delta for that 8 years. So to fund that bucket, we need (annual expenses - income from SS/pension) x 8 years. Multiply out, do present value, that's how much more you need saved now to cover those 8 years. Then from say 70-78 we have a second SS; then 78 we lose one SS; then maybe 85 we build in extra room in the budget for long-term care; etc. Do the math for each budget, and then add it all together -- that's how much we need to have in current dollars to retire at 58. When your current 'stache = the total present value of all of your buckets, you are FI and can RE at will.
The nice thing about doing it this way is that you can run it doing different assumptions about when you take SS and what pension option you take, and see how those choices affect your FIRE date. You can also use different assumptions for taxes and return on investments and such to reflect your risk tolerance.
