How can advisors help clients be better prepared to choose? Let’s start with the qualifying information needed to make this key decision. Advisors should consider seven important questions:

  • Does your client have a spouse or children who will rely on this pension for income, even after your client has passed on?

  • Is your client within two years of retiring? Assume that “retiring” means the date their pension will begin. You don’t want to begin a pension maximization program too early – it will end up costing too much and eliminating any advantage.

  • Is your client’s projected pension income $1,500 per month or more before taxes? Pension maximization benefits from economies of scale; if income is low, the cost of this plan will outweigh the benefits.

  • Is your client’s pension indexed for inflation? Indexing can strongly affect the benefits of pension maximization.

  • Does your client smoke? The costs are lower for non-smokers.

  • Is your client insurable? Health considerations that mean a higher price or a declined offer from an insurance company could erase the benefits of this kind of planning. The default option here is what your client started with: one of the traditional pension income choices or the commuted value (if it has been offered).

  • Does your client’s pension plan require that he or she select a joint and survivor life option in order to continue post-retirement medical benefits? If so, pension maximization may not be the best choice, as replacement of this medical coverage could prove to be VERY expensive.

    The final question highlights the benefits of pension maximization. The plan allows pensioners to insure their own survivor pension privately, rather than allowing the pension plan to insure it – often a higher price.


  • Cindy D. David, CFP, CLU is president, estate planning advisor, Cindy David Financial Group Ltd.