OK, let’s cut to the chase! The goal for most teachers is to put them in a position to choose to maximum option from PSERS when they retire. The maximum option provides the greatest benefit for the retiree of any of the options, but, provides no survivors benefits. That is the tricky part, especially if the retiring teacher is in poor health. But, to provide a survivors benefit, one usually has to accept a reduction in benefits to provide a benefit to a spouse, significant other, or children. The more benefits you want to provide, the more the cost (ie reduction in benefits). The difficult part of the process is to determine if there is a need to provide a survivors benefit, and, if so, to what extent. In fact, it is so complicated to figure out, you should probably hire a financial advisor to run the calculations. If you or your spouse have enough investments, pensions, or other assets, you may not need to provide a survivors benefit through PSERS. Those who are single are in the same boat and just might be able to select the maximum option and be done with it.
Our next blog post will go into the details of how Option #1, #2, and #3 work.