My age is 47 and will have 30 years completed with my employer. I am eligible for DROP retirement benefits eff 8/1/12. The DROP is a program that provides an alternative method for payment of retirement benefits for a specified and limited period for members. Under this program, you may retire and have your retirement benefits accumulate in the FRS Trust fund, earning interest while you continue to work for your employer for up to 5 years. My insurance will be full paid also.
Here is my info:
I am married and my age is 47. Spouse is 46.
I have 2 children age 25 and 20
I have 1 grandchild age 1
Here is the different options
Option 1: A monthly benefit payable for my lifetime. Upon my death, the monthly benefit will stop and my beneficiary will receive only a refund of any contributions. Have paid which are in excess of the amount I have received in benefits. This option does not proved a continuing benefit to my beneficiary.
Option 2: A reduced monthly benefit payable for my lifetime. If I die with a period of 10 yrs after my retirement date, my designated beneficiary will receive a monthly benefit in the same amount as I was receiving for the balance of the 10 yr period. No further benefits are then payable.
Option 3: A reduced monthly benefit payable for my lifetime. Upon my death, my joint annuitant, if living, will receive a lifetime monthly benefit payable in the same amount as I was receiving. (Exception: The benefit paid paid to a joint annuitant under age 25, who is not your spouse, will be your option one benefit amount. The benefit will stop when your joint annuitant reaches age 25, unless disabled and incapable of self support, in which case the benefit will continue for the duration of the disability.) No further benefits are payable after both my joint annuitant and I are deceased.
Option 4: An adjusted monthly benefit payable to me while both my joint annuitant and I are living. Upon the death of either my joint annuitant or me the h benefit payable to the survivor is reduced to 2/3 of the monthly benefit received when you both were living. ((Exception: The benefit paid paid to a joint annuitant under age 25, who is not your spouse, wll be your option one benefit amount. The benefit will stop when your joint annuitant reaches age 25, unless disabled and incapable of self support, in which case the benefit will contine for the duration of the disability.) No further benefits are payable after both my joint annuitant and I are deceased.
Options 3 and 4 are designed to be "actuarially equal". This means if you select option 3 or 4, the expected total payments to both you and your joint annuitant are about the same as the total you alone would be expected to receive under option 1. The reduction procedure for options 3 and 4 can also be described as resembling an insurance policy that guarantees the payment of a definite monthly amount over the lifetime of two individuals. The reduction in the monthly benefit can be considered the premium paid for this insurance.
The amount of reduction of the Options 3 and 4 From the Option 1 benefit depends on your age and the age of your joint annuitant. If you intend to name someone other than a spouse under Option 3 or 4, please obtain the joint annuitant information sheet, JAD, from your personnel office or the Division of Retirement for the definition of a joint annuitant. The benefit paid to a joint annuitant under age 25 who is not your spouse, will be your option one benefit amount. The benefit will stop when your joint annuitant reaches age 25, unless disable or incapable of self support. In which case the benefit will continue for the duration of the disability.
The reduction from Option 1 to 4 is $158 per month
The reduction from Option 1 to 3 is $272 per month
My spouse would be able to make it on his salary if I die and my retirement benefits ends. We will have around $500,000 in about 5 years in our Roth 403, 403b, and 457b.
My question is should I take the largest benefit (which is option 1) ? Should I purchase any life insurance?
Sorry for giving so much information but I just wanted to get advice from Mustachian's on this difficult decision I have to make. I am not able to change it after I submit it.
