Payout Calculation Question

[BooBoo]

I have the option to take an early retirement from a company I worked for in the past at a reduced payout. I am still actively employed and do not currently need the additional income. I am not sure how to calculate the best payout option. The payouts are below with no cola:

@ 55 279
@ 62 363
@ 65 399

Married ,age 55, current tax bracket is 28% and will be less when fully retired. Payments will cease when I pass.

Your input is appreciated,

Boo Boo

 

[braumeister]

Looks to me like the payout goes up 4.3% per year from 55 to 62, and 3.3% per year from 62 to 65.

I would use those values to determine how long to delay receiving it. That would give you an idea of whether to delay it or not.

 

[MasterBlaster]

here's a nifty lump-sum calculator. Put in your info, pick a mortality table, pick an interest rate (ie. a discount rate) and compare lump sums.

Modify your birthdate so that you appear to the calculator to be 55,62,65 (or whatever).

Then compare lump sums.

https://www.pensionbenefits.com/calculators/cal_main.jsp?sub_item=lumpsum_cal

 

[pb4uski]

Looks like 62 is the sweet spot. Since you don't need the money now, it wouldn't earn much in the current environment and any amounts received now would increase your taxes, I would lean towards letting it ride until you retire unless your health is poor or the pension is seriously underfunded and not covered by the PBGC.