How to Use Pension Maximization
Taking the Maximum annuity and Using Insurance/Annuities
The joint and survivor option (J&S) allows you to provide continued retirement income to your designated beneficiary. As described in the section Joint and Survivor (J&S) Optional Form, it is important to consider that:
Most plans will allow you to select only your spouse at time of retirement as the joint beneficiary to continue to receive your annuity upon your death. Also, once you have made that selection, if they should die before you do, your annuity continues to stay reduced permanently even though you can't select another beneficiary to replace them and therefore no pension will continue upon your death (unless the pop-up joint and survivor with a higher reduction in your benefit was available as an option and you had selected it).
If you divorce, you will not be able to change your former spouse from being the beneficiary even if you both agree to the change.
You need to select the percentage that you want to continue to your spouse/beneficiary at time of your retirement (e.g., 50%, 75%, 100%).
One of the ways to try and maximize the financial value of your annuity and also have the most flexibility regarding the ability to either change your beneficiary (for reasons above) is by taking the maximum benefit and using insurance/annuities to provide the continued income and estate/inheritance desired. The better is your health (especially if you are female) at the time of your retirement, the more financially effective is this option. This option may not work (may not be the best option) for those who have poor or below average health at the time of retirement. This is because private insurance companies will take your health into account at the time you retire. The better your health, the lower is the cost of insurance or the greater the benefits that can be paid to your spouse or leave as an estate/inheritance. A retirement plan cannot use individual health (or gender) in determining the charge (reduction in benefits) and must charge everyone the same and because of that it sometimes assumes that those selecting the option will be predominately male and have slightly below average health (see the discussion in what the plan is assuming about you in determining what it is charging you for your annuity option). But the only way to find out if this is your best option is to see what can be provided to you and then compare it to what will be provided by taking one of the retirement plan's optional forms of payment (e.g. joint and survivor).
More information is available including an illustration of how this works is available.
http://www.pensionoptionsadvisor.com