I can see it from here...

[dingo]

retirement that is. Greetings from North Georgia. I noticed this site recently and decided to jump in. I have a couple of questions about my retirement possibilities.

salary 100k; wife 60k (she will work at least 5 years after I retire)
401k: $500k wife 80k in sep ira
80k in money market; $50k misc stocks
Our healthcare will be paid by company for the duration if I work until 61.
No debt
SS will be about $2500 at 66

Expenses are $4000k/mth.
We have home renovations of around 40k on the horizon.

My question is about my pension: I am eligible to receive a lifetime pension of 60k/yr. at 62. My wife gets 50% for life after I pass. I also have the option of taking a lump sum instead of a pension. Currently it is valued at $767,000. It is tied to the bond market and may go up or down by the time I retire.

What is the best option and why.

Members of my family typically live into their mid 80's to 90's so the opportunity for a lifetime pension seems hard to pass up.


Also, should I consider going out at 61? (2019)


EDIT: no legacy invloved

 

[Car-Guy]

My question is about my pension: I am eligible to receive a lifetime pension of 60k/yr. at 62. My wife gets 50% for life after I pass. I also have the option of taking a lump sum instead of a pension. Currently it is valued at $767,000.

What is the best option and why.

The questions of taking a monthly pension or lump sum has been discussed on this forum a great many times. I don't think the questions or answers have changed. So you might want to do a few searches on the topic and read those first.

 

[joeea]

I can see it from here...
retirement that is. Greetings from North Georgia.

I thought you were going to say you were from Alaska, and could see Russia.

It seems to me you are probably set for life if you retire at 62. Congratulations!

Between your portfolio, pension, 5 more years of your wife's income, and eventual Social Security, your tiny $48k in expenses are well covered. I'm assuming your pension is not inflation-adjusted, but a significant percent of your expenses will be covered by inflation-adjusted SS. By waiting a few years, your benefits might grow to as much as $3300/month.

You and your wife might consider socking away as much as possible between now and your retirements to increase your portfolio as a hedge against higher future inflation.

I agree that the lifetime pension makes sense for you, depending on the anticipated long-term solvency of the organization servicing that pension.

You didn't mention it, but hopefully you have long-term care insurance covered.

I assume you have no plans to leave a legacy, no need for any future large one-time expenses, and are confident in that $48k/year expenses estimate.

You might also consider running the numbers on alternate Social Security claiming dates. Depending on your relative ages and the income history differences, it might make sense for one or both of you to delay claiming until 70. By waiting a few years, your benefits might grow to as much as $3000/month.

 

[street]

Welcome!
You will get some great advise here on those questions. As for lump sum or pension I did and like the lump sum option. In my case I didn't need the pension to live on so I opted for lump sum and but that money to work. It has been invested for about 5 years now and it has increased my portfolio by 75% in that time frame. For my plan I wanted to continue to grow my investments and I didn't need that money. Each case is different and that is something you can decide what is best for you.

 

[DrRoy]

I would take the pension.

 

[Ready2Go]

If the pension is cola, I’d consider installments. Otherwise, I’d be lump sum all the way!

 

[VanWinkle]

Checking on https://www.immediateannuities.com/, 767,000 invested in a joint 100% annuity at 61 will pay 3255 per month for life. This does not have a COLA(cost of living adjustment). Does your pension have a COLA?

If they are offering 60K per year at 61 for a 50% joint annuity, it seems to be a great deal to take the pension. It also makes sense for a bridge of guaranteed income to SS at 70 if that is your intention.

The wife working another 5 years is never a guarantee and usually they retire sooner after seeing you in retirement. Speaking from experience here.

 

[brucethebroker]

Welcome.
Retire sooner, not later, BTW. It seems to be the consensus here.

 

[dingo]

great replies everyone. You definitely gave me some things to consider*

.

 

[Dtail]

Welcome.
Retire sooner, not later, BTW. It seems to be the consensus here.

+1

 

[Ready]

Checking on https://www.immediateannuities.com/, 767,000 invested in a joint 100% annuity at 61 will pay 3255 per month for life. This does not have a COLA(cost of living adjustment). Does your pension have a COLA?

If they are offering 60K per year at 61 for a 50% joint annuity, it seems to be a great deal to take the pension. It also makes sense for a bridge of guaranteed income to SS at 70 if that is your intention.

+1

Not even a close call based on these numbers. Take the pension.

 

[joeea]

Retire sooner, not later, BTW. It seems to be the consensus here.

Yup, go figure. Who would have though than an Early Retirement forum would favor retiring early...

 

[street]

The pension is an annuity payment and you pay for certainty. The annuity/pension comes at an expense the way I look at it. They are betting and odds in their favor there will be money on the table when you are gone. If there is money on the table they win.

I like the lump sums because I have control and my odds of making more money and not leaving money to a financial institution is great value too me then an annuity.

I'm not trying to convince you one way or the other. That is my view and I'm sure it isn't viewed that way here because there are to many wise and smart financial people here. It some what depends on how long you live and what % of return you can make on your investments. It is a gamble in my opinion and when you run the numbers I believe I can make more then 4% in 30 years with that initial sum.

 

[Ready2Go]

Much less risk in the lump sum. On top of the risk that you die early...which is very real... there's also the possibility of your company going the 'deep 6' in the course of a long retirement. Also very real. Happened to my neighbor who was a pilot for TWA for 30 years. He gets a fraction of his original benefit and it comes from the PBGC.

 

[street]

^ exactly you run the numbers and yes it is better. LOL The thing is they aren't going to lose on paying a pension. Way to much risk in pension and absolutely no control of that money. It wouldn't be for me.

 

[NW-Bound]

"I can see it from here..."

retirement that is...

I thought you were going to say you were from Alaska, and could see Russia. ...

I thought of this:

 

[exnavynuke]

If it isn't COLA'd, I'd take the lump sum. If it's COLA'd, then it's a different ballgame though.

 

[joeea]

The pension is an annuity payment and you pay for certainty. The annuity/pension comes at an expense the way I look at it. They are betting and odds in their favor there will be money on the table when you are gone. If there is money on the table they win.

If you value certainty, then you win.

Someone rather famous once said "If you have won the game, stop playing." Annuities can be part of that win. No need to keep playing with a lump sum.

(I'm not saying I generally favor annuities, just that I need to run the numbers to see where they take me before I decide.)

 

[street]

^ agree certainty is a good thing I like certainty. The one thing that comes with it is a price for that certainty. It is interesting how so many dislike annuities but will take a pension or a lump sum.

The point is there is no difference between a pension and an annuity. You are paying for that certainty. I most definitely am not against a pension or an annuity. I have an annuity and been schooled hard about the cons of owning one.