What is the formula?

[ana.omaly]

Hi All

I am new here. My company has decided to stop payments into our retirement funds effective this September. This fund is an Lifetime Annuity. I am trying to figure out when I should start taking the payments.  I would like to leave corporate America and persue my artwork full time ( I just got gallery representation in Sag Harbor!!!) and use this money to invest rather than for living expenses.

OK so here is my question:

If payments stop in Sept 2006 and I retire at 65 my payments will be approx 260. per month. So, I figure that if I live to 80 I will collect $260. for 180 months with a total of $46942 over 15 years. But . . If I start taking payments this year and I live to 80 the I will be collecting for 384 months at $119.48 per month giving me a total of $45880 over 32 years.

Am I correct in my calculation of payout? If not, can some one give me the formula to calculate the bottom line?


Mega Thanks

 

[brewer12345]

The nominal amounts don't really matter. What is important is the present value of the two streams of cash. Using a very conservative discount rate, I come up with the stream of payments starting now is worth a LOT more than the stream of payments if you start at age 65 (about $23k vs. $15k). If I were in your shoes, I would start payments now.

 

[Donzo]

Take it now--who knows where you will be at 65? I have a pension starting as early as 55 - I lose 4% for every year I take it before 65 or 40% less. I am taking it as soon as I can, then it is a sure thing-if I croak I plan on using it to help with my kids college costs in the short term and for mad money after-

 

[ana.omaly]

brewer & Donzo

Thank so much for your feedback & and for giving me the answer that I wanted to hear. 

 

[spideyrdpd]

They dont offer a lump sum option ?