Q. I'm 64, retiring this year, and will actually have a pension. My question is about the pension and the survivorship clause. The survivorship clause provides my wife, age 61, with a lifetime pension that is 50 percent of mine in the event of my death. The $1,168 a month pension, however, will be reduced by about $125 a month if the 50 percent survivorship option is in place.

Isn't that a bit expensive for what really amounts to life insurance?

I want to insure my wife's financial well-being in the event she outlives me but wouldn't it be better to buy a separate policy? I'm aware that asking a spouse to waive future spousal retirement benefits is akin to touching a third-rail but I'm attempting to approach this thoughtfully and logically.

--- J.W., by e-mail from Dallas

  

A. Every worker fortunate enough to participate in a defined benefit pension plan must face this question on retirement. Like you, I find the idea of buying life insurance separately and maximizing pension income very interesting. I can tell you, however, that in the 25 years I've written this column I've never found a case where you're better off taking the maximum pension and providing the needed survivor income through a life insurance policy.

That doesn't mean it's impossible. It just means no reader in 25 years has provided numbers that dictated buying life insurance. You can understand this by doing the math.

The benefit your wife would receive upon your death would be $584 a month for her life. A visit to www.immediateannuity.com tells us that a single lifetime annuity for a 61 year old Texas woman would cost about $100,000 today. Immediate liability for that $100,000 is the obligation the annuity provider is taking on when they offer the survivor benefits.

A visit to www.insure.com tells us that a 64 year old man in reasonable health can buy such a $100,000 level premium for life policy for about $154 a month. He would pay $135 a month for a 30-year level premium policy and $93 for a 25-year level premium policy.

Unfortunately, you must pay for that policy with after-tax income. If you are in the 25 percent tax bracket you'd have to have $124 a month of pre-tax income to have $93 a month for the lowest premium. Even in the 15 percent tax bracket you'd have to start with $109 to cover the $93 premium.

Bottom line: If you're going to have a pretty good income in retirement, the "tax wedge" makes it better to get the benefit by having your pension reduced. If you're not going to have a pretty good income in retirement, you should take the "sure-thing" and avoid the possibility of dropping the life policy later. Q. With Ameritrade and TD Waterhouse merging my self-directed IRAs will now be with one broker, down from the three I originally had. Diversification is important in the assets you own, so I figured splitting those assets among three brokers would provide "broker diversity."

Is it worth the effort?

---R.G., by e-mail

  

A. No. It isn't worth the effort. More important, you may end up making problems for yourself. The risk you face by having all your accounts in one place is minimal.   The risk you face from having your accounts all over is frequently underestimated

There are two good reasons to consolidate accounts.

The first is paperwork and its complexity. If you consolidate accounts you'll reduce paperwork and simplify managing your finances. This is particularly important as we get older and have to deal with required minimum distributions.

The second is expenses. Having your accounts at one broker will often work to qualify you for lower commissions on trades and the elimination of minimum fees.

  

CORRECTION:     In my (7/21/05) Thursday question and answer column the current yield on an I Savings Bond was incorrectly stated as 3.8 percent. The correct current rate is 4.80 percent.