Pension Max
I’m hoping to get some perspective from the experts in this group regarding pension max plans.
I am planning on retiring in 7 years at age 62. I will have 2 pensions that pay as follows…
Pension 1: $55k/yr with 100% survivor benefit
Pension 2: $140k/yr single life annuity or
$105/yr w/ 100% survivor benefit
It seems I should take the larger pension amount in pension 2 and use the “extra” income to buy life insurance. The two things I want to accomplish with the life insurance are…
Provide for my surviving spouse and “replace” the pension income that will go away when I pass.
Provide an inheritance for my 3 kids. I am thankful to have these pensions, but their weakness is that if my wife and I both pass, the pension benefits go away. The pension max seems like a great way to solve this weakness and provide some legacy money for the kids.
Some important things to consider are my wife is 11 years younger than I am and my kids are ages 11, 9, and 6. Also, I would likely need to prichase the insurance now and pay premiums for the 7 years until the the “extra” income is available. We are in a position to afford this but it is a consideration. We would break even in about 8 years after retirement and this whole plan would essentially be funded with “house money”.
My financial advisor has looked at a number of products and has suggested an IUL policy with a death benefit of $1.725m with a monthly premium of $1,500/month. I’ve read many negative comments here regarding IUL. My advisor says this policy is one of the more affordable options, surprisingly less than a GUL policy of the same size.
So, please give me some opinions on this. Is an IUL appropriate in this scenario? Are there some other products and structures that you have used in this scenario?
Thanks if you’ve read this whole thing and thanks in advance if you offer some insight.