What is the most common mistake people make when choosing pension withdrawals?

RICHMOND, VA, UNITED STATES, December 16, 2025 /EINPresswire.com/ -- What is the most common mistake people make when choosing pension withdrawals? A HelloNation article featuring Robert Carey of Carey Secure Money Management & Financial Services provides a clear answer. The feature shows how many retirees automatically select the spousal option without fully understanding its trade-offs, and it highlights the importance of comparing alternatives like life insurance, retirement savings, and investment options before finalizing this decision.

The article explains that pension withdrawals affect not only retirement income but also a spouse’s long-term financial security. Many retirees choose the spousal option, which reduces monthly benefits so payments can continue to a surviving spouse. While this seems like the safest route, it comes at a cost. The reduced income can limit lifestyle choices in retirement, and for some families, better solutions exist if they examine the full financial picture.

One alternative outlined is using life insurance. By keeping the full pension payout and purchasing a policy, retirees may maintain higher retirement income while still protecting their spouse. Depending on factors such as age, health, and premium costs, this strategy can sometimes provide more security than the spousal option itself. The HelloNation article stresses that comparing these strategies helps retirees avoid unnecessary sacrifices.

The feature also notes that many people overlook the role of existing retirement savings. If a retiree already has an IRA or 401(k) with substantial assets, those funds could serve as a safety net for a spouse. In such cases, giving up monthly income through the spousal option may not be needed. A careful review of retirement savings ensures families see whether they already have enough protection without reducing pension income.

Tax consequences also factor heavily into the decision. While reduced income from a spousal election may lower annual taxes, it also means less money each month. Life insurance, by contrast, requires after-tax premiums but generally provides a tax-free benefit to the surviving spouse. The HelloNation article underscores how tax consequences should be weighed carefully before locking in a pension withdrawal choice.

Employer-sponsored plans further complicate the decision. Some plans offer varying levels of spousal continuation, from 50 percent to 100 percent, each with its own adjustment to monthly retirement income. Retirees who review these variations alongside other financial resources gain a clearer picture of which structure best serves their family.

Investment options can also influence pension withdrawal choices. Retirees with strong portfolios may feel comfortable keeping the higher monthly pension, knowing their investments can protect their spouse if needed. Others may prefer the guaranteed nature of the spousal option, even at a reduced rate, since it does not rely on market performance. The article makes clear that the right path depends on individual preferences and circumstances.

Longevity is another key factor. Couples expecting longer lifespans may find the spousal option appealing since it guarantees lifetime retirement income for both. But if health concerns suggest shorter life expectancy, the reduced payments may not provide enough benefit to justify the trade-off. By aligning pension withdrawals with realistic expectations, families can make choices that fit their circumstances.

Risk tolerance also plays a role. Some retirees value guaranteed, predictable payments, even if smaller. Others would rather maximize current retirement income and rely on life insurance or retirement savings to manage risk. The HelloNation article highlights that neither choice is inherently right or wrong, but mistakes occur when retirees make decisions without considering their own comfort level.

Robert Carey’s expertise in financial services helps readers understand that pension withdrawals are one of the most important decisions retirees face. By comparing the spousal option with alternatives such as life insurance, IRA, or 401(k) savings strategies, and evaluating tax consequences and investment options, individuals can make informed choices. The key is avoiding automatic decisions and instead focusing on what best balances retirement income with spousal protection.

The HelloNation feature concludes that by weighing costs, long-term protection needs, and the overall financial picture, retirees can avoid the common mistake of unnecessarily reducing income. Each household’s best solution looks different, but with careful planning, retirees can protect their spouse while preserving more of their retirement savings.

The full article, titled Common Mistakes with Pension Withdrawals, can be read on HelloNation. It features Robert Carey of Carey Secure Money Management & Financial Services, whose professional insights provide clear guidance on avoiding mistakes with pension withdrawals and protecting long-term retirement income.

About HelloNation
HelloNation is a premier media platform that connects readers with trusted professionals and businesses across various industries. Through its innovative “edvertising” approach that blends educational content and storytelling, HelloNation delivers expert-driven articles that inform, inspire, and empower. Covering topics from home improvement and health to business strategy and lifestyle, HelloNation highlights leaders making a meaningful impact in their communities.

Pat McCabe
HelloNation
[email protected]

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