When you die, your pension benefits might go to your spouse. However, the spousal arrangement must be established well in advance. In fact, you must make a decision about spousal benefits when you retire and start taking your pension. Your decision at retirement will affect how much your spouse receives.
If you elect to take your full pension benefit, your spouse will receive nothing when you die. Your spouse must sign a waiver for you to take this benefit option since you are effectively disinheriting her. If your spouse has sufficient resources and can live off of her own savings, then this arrangement may be fine for you.
50 Percent Benefit
A 50 percent benefit is a pension benefit that gives your spouse half of your pension after you die. In order for your spouse to get this, you must agree to reduce your pension benefit by 1/2 during your lifetime. In other words, you take 1/2 of your pension benefit during your lifetime, and your spouse receives 50 percent after you die.
25 Percent Benefit
A 25 percent benefit means that you take 75 percent of your full pension benefits. At your death, your spouse receives 25 percent of your full pension benefits. This benefit option does not leave much for income for your spouse. However, it does provide a basic pension benefit amount that may be used to help pay for your spouse's living expenses (or for any other purpose).
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If you elect to take a lump sum amount at retirement, you will receive all of your pension benefits at once. You may invest the proceeds any way you see fit. If you do take a lump sum, you may leave all or part of the benefit to your spouse. You may also use part of the proceeds to purchase a life insurance policy. The life insurance policy will provide a death benefit to your spouse in the amount you choose.