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09-11-2008, 08:27 AM
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#1
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Confused about dryer sheets
Join Date: Nov 2007
Posts: 4
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Pension Options
I plan to take my pension in October when I turn 55. The 2 options I am considering are to take $1324 per month for life with 100% and Survivor benefits or take $2113 until 62 then it drops to $638 per month also with 100% Survivor benefits.I have another full time job so I plan to save this pension income for 5 years and they retire completely. What do you think would be the best option? I realize a big factor is how long will I live. I would appreciate any advise you might have.
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09-11-2008, 08:31 AM
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#2
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Thinks s/he gets paid by the post
Join Date: Nov 2005
Location: Colorado, USA
Posts: 1,127
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Hi Hurley, and welcome to the forum.
Is the pension COLA adjusted, or will it still be paying $1324 20 years from now?
Coach
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09-11-2008, 08:35 AM
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#3
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Confused about dryer sheets
Join Date: Nov 2007
Posts: 4
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The pension is not COLA adjusted, so will it still be paying $1324 the rest of my life.
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09-11-2008, 08:38 AM
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#4
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Thinks s/he gets paid by the post
Join Date: Jun 2006
Location: Central, Ohio, USA
Posts: 2,635
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Welcome to the board.
A lot depends on so many variables, do you want to draw the most money, what are your plans for taking SS at what age, what will your spouse draw in benefits either from work or SS, is there a large age differential, COLA (as already mentioned), other assets available and expected return(s), expenses expected in retirement, medical benefits needed or provided. I have worked on a spreadsheet that takes all of that into consideration for DW and myself and I find that it needs constant revision however that is the only way I know of to adjust all the variables that are unique to our situation.
Opps, I was posting while you were typing.
__________________
Vietnam Veteran, CW4 USA, Retired 1979
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09-11-2008, 09:30 AM
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#5
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 1,183
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What happens if you defer tapping it? Some continue to grow and some do not. Since you have another fulltime job with adequate income that mey be an option and no taxes to be paid. Also, do you have a cash out option and the ability to roll to an IRA? What do survivor options look like cost wise?
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09-11-2008, 10:06 AM
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#6
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Confused about dryer sheets
Join Date: Nov 2007
Posts: 4
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It will increase 4% per year until age 62 if I don't take it at 55. I donot have a cash out option.
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09-11-2008, 10:14 AM
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#7
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Confused about dryer sheets
Join Date: Nov 2007
Posts: 4
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If I wait until 62 the amount would be $1738 per month per the companys calculations.
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09-11-2008, 10:57 AM
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#8
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 1,183
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If the wages in the new job are decent you might be bumping your tax bracket and paying a good bit in taxes only to invest it. Can you get a better than 4% rate of return after the tax hit? It might be nice to have a larger monthly sum later rather than cash in the bank. I know some of the math wizards might be able to help you better on this than I can. Just a thought and worth consideration if you and spouse have a good life expectancy.
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09-11-2008, 11:08 AM
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#9
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Feb 2006
Location: Washington, DC
Posts: 11,327
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Don't forget to evaluate the tax implications. Most pension income is taxed as regular income so if you are in a high bracket while working you can kiss some goodbye. When you turn 62 and income drops the pension income may be taxed at a substantially lower rate.
__________________
Idleness is fatal only to the mediocre -- Albert Camus
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09-12-2008, 07:07 AM
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#10
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Thinks s/he gets paid by the post
Join Date: Feb 2008
Posts: 1,281
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Sometimes life insurance is cheaper than a "survivor" option.
__________________
Retired 2009!
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