If you are fortunate enough to have a pension, because you worked for the federal government or a company that offers a pension, you will be faced with making a decision when you retire.

Pension election is a decision you must make to either take your full pension immediately or take a reduced pension with a survivor’s benefit upon your death. It’s important that you take the time to understand your options since pension election is an irrevocable decision.

Often, married couples will automatically elect the survivor benefit. It’s understandable because people want the peace of mind knowing that their spouse will receive income even when they’re gone. Though this seems like a good choice, it might not always be the best financial decision.

Here are some things to take into consideration when making a pension election:

1. Is your spouse younger or older than you? How is his or her health? If your spouse is older than you or is not in good health, it might not make sense to take a reduced pension in exchange for a survivor benefit.

2. Second, does your spouse have enough income based on his or her work history? If the answer is yes, it might not make sense to elect a survivor benefit.

3. How long do you expect your retirement to last? You must take into account that your retirement could last for 30-plus years due to advancements in health care.

4. Are you a federal worker? If you are a federal worker hired in 1984 or later, you are part of the Federal Employees Retirement System, or FERS, which has its own rules on pensions. For example, Kimo is a FERS federal employee who is entitled to a pension of $60,000 per year upon his retirement. But, he wants to provide a survivor benefit for his wife, Lani. Kimo’s pension will be reduced by 10 percent to $54,000, and upon his death, Lani will receive a surviving spouse’s pension of 50 percent of the original $60,000, or $30,000 per year for the rest of her life. Kimo could also choose a 5 percent reduction in his benefit, which would provide Lani 25 percent of his pension if he dies.

If you are a nonfederal employee and eligible for a pension, typically your pension would provide similar choices with some additional options.

One option is called “Single Life Option.” This option provides the highest payout but with no survivor benefit.

Another common option is “Life With Period Certain.” This option reduces your monthly pension, but if you die before the end of the period that you select — typically five, 10 or 20 years — your beneficiary will receive the same payments for the guaranteed period. The longer the period you select, the smaller your pension will be.

If you outlive the period you have selected, you still get payments until your death, but your spouse doesn’t get a survivor benefit. For example, if you select Life with 10-year “period certain” and you die after collecting your pension for eight years, your beneficiary will receive the same payment you were receiving for two more years. But if you die in the 11th year, your beneficiary will receive nothing.

The key is to plan ahead so that you can understand all the options and select one that is most financially suitable for you and your spouse.

Kana Aikawa is a financial adviser at Wealth Managing Partners, Inc. She has a Bachelor of Business Administration in Finance and Management from the Shidler College of Business at the University of Hawaii at Manoa. Reach her at 954-7072.