Which for retirement: Single-Life Annuity or Level Income Annuity?

[MichaelG387396]

I am just starting the road to retirement. I'm 65. I have a pension that will be 451 dollars every month when I start getting it after I officially retire in July 1. But applying for social security is extremely perplexing to me, and further confused by a dependent and a wife who just died a few months ago.

So the main parameters are thus:

I have a daughter who is 38 years old, she has been disabled since she was 19 years old. She's been collecting SSD since then. My wife died November, so the main issues is knowing how to ensure my daughter can get the extended payments from social security until i die and after, because they said since she's been on disability before the age of 22 she can use my social security too.

They say I must select either Single Life Annuity or Level Income Annuity. But they say things like you cannot select level Annuity if you start your pension before your social security or something strange like that. They also give options for the level income annuity 50%, 75%, 100%... that sort of thing.

I need to know how to best continue to survive for my needs until I die, while ensuring my daughter is covered before and after I die. We are currently looking to sell our house (just finished paying it off) and moving down south in a new fully paid off house.

If you need any further information to help gauge what I need, I will easily provide it. But I'm getting lost... I used to make these sort of decisions with my wife who was usually really good at understanding this type of thing. But now I'm lost, and I must do right by my daughter and son.

Thank you for any help!

[Winter2025VA]

@Tonster521 , I gave you "kudos" for ALL your answers!!!  👍

I had deleted my previous comment = lol, so your eyes and software are okay. And this time the moderator didnot delete it.  🤣😂

Happy Sunday,

Nicole  👵

[Tonster521]

@MichaelG387396 Sorry for your loss. Please accept my condolences. It appears to me that you are confusing your pension elections and Social Security election. Before I address your situation, Please advise if your daughter is receiving Supplemental Security Income (SSI) or Social Security Disability? If Social Security Disability, whose earnings are those benefits based on? Also, is she eligible for Medicare due to disability or Medicaid? Or, is she covered under your employer's plan due to being a disabled dependent? Will you be eligible for retiree insurance coverage after you retire? If so, will your daughter also be covered under that retiree insurance plan?

If your daughter is covered by Medicaid, there are certain income thresholds which vary from State to State. So, her benefits from Social Security or SSI and your pension should you elect a co-pensioner option naming her as a co-pensioner need to be estimated. You may need to discuss your estate strategy with an elder law attorney and if you need to create a Special Needs Trust.

[MichaelG387396]

It is SSD. She's been disabled since 19 for crohns disease and colitis. She's on medicare, because due to being on SSD she was eligible for it after being on SSD for 24 months or something like that.

Recently her benefits were increased by a lot, and then we were told by our lawyer that if she was on SSD before the age of 22 she can apply and receive social security benefits under my history, which would greatly increase her monthly payout.

I'm not sure if that answers everything, sorry I am very slow with cellphones I only learned how to use a smartphone like a year ago haha. Let me know if you need any further info; and thank you profusely for your help. You have no idea how overwhelmed I've been, I've never expected to do this alone. The timing is just so bad, I don't have time to learn the things I need to learn before retirement is already going to be here. Now I have to scramble to learn it all. I don't want to make a mistak and the pressure is great.

I do have a financial retirement advisor, but because I still work two jobs until I retire I very rarely have the time see him - maybe once every two months. And I always have a lot of questions, but there's always so many questions and something new always comes up in the between time before I see him again.

The latest curveball was getting my pension packet back from my union saying I didn't fill it out correctly. And all this stuff with the single income annuity or level income annuity over my pension, which as I said is estimated to be 451 a month or something like that.

Thank you again 🙂

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@Tonster521 wrote:

@MichaelG387396 Sorry for your loss. Please accept my condolences. It appears to me that you are confusing your pension elections and Social Security election. Before I address your situation, Please advise if your daughter is receiving Supplemental Security Income (SSI) or Social Security Disability? If Social Security Disability, whose earnings are those benefits based on? Also, is she eligible for Medicare due to disability or Medicaid? Or, is she covered under your employer's plan due to being a disabled dependent? Will you be eligible for retiree insurance coverage after you retire? If so, will your daughter also be covered under that retiree insurance plan?

If your daughter is covered by Medicaid, there are certain income thresholds which vary from State to State. So, her benefits from Social Security or SSI and your pension should you elect a co-pensioner option naming her as a co-pensioner need to be estimated. You may need to discuss your estate strategy with an elder law attorney and if you need to create a Special Needs Trust.

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[Tonster521]

@MichaelG387396 I suggest calling SS and discuss your case with a Rep. I think your daughter may be eligible for SS Benefits pursuant to your Covered Earnings once you start your Old Age (aka Retirement ) Benefits. She may receive additional benefits based on your Covered Earnings. 

You advised that your daughter has Medicare. Does she have a Supplement to Medicare? Is it Medicaid? If so, you need to be aware of the Income threshold so she continues to be eligible for Medicaid or will qualify for Medicaid in the future. 

It appears you are eligible for a Defined Benefit Pension through your Union. You should request a Summary Plan Description (SPD) if you do not already have one. The SPD will provide information regarding your pension elections. Generally, the life annuity option will provide the greatest amount of pension. However, the pension stops upon your death. If you want part of your pension to continue to your son or daughter, you need to elect a co-pensioner option. If you elect a co-pensioner, your pension will be reduced based on the difference in ages between you and the co-pensioner. The Union Pension Rep should be able to provide those amounts for your review. The level income option uses your amount of SS Benefit to develop your pension benefit. However, the provisions will vary from Plan to Plan. You need to review your SPD for those provisions. Your Union Pension Rep should be able to clarify those provisions. Good Luck.

[MichaelG387396]

Thank you so much for this ongoing support. I wish these things were less complex, it's making my head spin. I guess the next step is taking the info you gave me here and bring it to my union pension rep or my financial advisor whom I'm seeing on Tuesday. 

I appreciate the time you've taken out to explain this. I feel like I'm on quicksand trying to suddenly understand all the things my wife would do for the 45 years we were married...

[Tonster521]

@MichaelG387396 You will be OK. Remember, the SSA and Union Pension Plan are fiduciaries that are required to help you understand your benefits. Your financial adviser is probably a better resource for how to invest money. Although there may be financial advisers knowledgeable of the SS Program and Defined Benefit Pension Plans, they are rare. Unless your financial adviser has knowledge of your Union pension benefits, his/hers advice is, at best, an opinion. My suggestions are to work with your Union Pension Rep. and the SSA Reps. Lastly, if you are selling your home and have other assets to pass on the your children, I suggest you discuss your case with an elder law attorney. You may need to create a Special Needs Trust for your daughter. Otherwise leaving assets/monies to your daughter may make her ineligible for Medicaid either now or later. Good Luck.