Pension or Portfolio ?

[Moemg]

Which would you rather have a 2 million dollar portfolio or an $80,000 pension with cost of living adjustments but no health care ? . The pension receiver has no other assets .

 

[samclem]

Who is providing the pension (Styrofoam Lawn Ornaments, Inc or the US Treasury)?

 

[Moemg]

Who is providing the pension (Styrofoam Lawn Ornaments, Inc or the US Treasury)?

Great point ! The pension is from the federal government .

 

[73ss454]

I think age might sway my choice but at 61 I voted for the 2M. This way there should be some money to leave to the kids. JMHO

 

[braumeister]

I'm confused. Are you specifying that with the pension you have no portfolio (i.e., no savings, just the pension)?

 

[obgyn65]

This is a tough question. I voted "not sure" and look forward to the discussion under this thread...

Great point ! The pension is from the federal government .

 

[ziggy29]

At what age? At 55, I take the pension. At 70, I take the cash.

 

[samclem]

That's a tough choice, but I picked the USG pension with COLA.

Better than either choice: split it equally in order to diversify and protect against various risks. $1 Million in savings and a $40K COLA'd pension.

 

[ziggy29]

Better than either choice: split it equally in order to diversify and protect against various risks. $1 Million in savings and a $40K COLA'd pension.

I would probably vote for this in a borderline case, not knowing my age when I was given the choice. Which speaks well for a FERS-style retirement plan.

 

[harley]

I'll take the dollars. I'm 54, and unless I shuffle off this mortal coil sooner than I expect to, I should be able to grow my chunk of cash over the long run. I can do my SWR and still have the adjusted principal to leave to my heirs (DD and D Uncle Sam ). With the pension it ends when I do.

 

[Moemg]

I'm confused. Are you specifying that with the pension you have no portfolio (i.e., no savings, just the pension)?

Yes , you only have the pension . This is just hypothetical .

 

[Moemg]

At what age? At 55, I take the pension. At 70, I take the cash.

A great point I did not even think about I should have put in an age . I decided not to add an age so we could all relate it to our own age . I'd go with samclean's choice and take a little of each .

 

[Alan]

I looked at it from from my current age of 55 and voted for the pension assuming it was 100% survival for spouse. I reckon I could save enough to leave a reasonable legacy if we wanted, given that DW and I expect a decent sum from SS also.

 

[Moemg]

I looked at it from from my current age of 55 and voted for the pension assuming it was 100% survival for spouse..

Another great point . I guess it has to be 100% survival to make it a reasonable choice . The reason I was wondering about this is because I have a pension and assets but during the melt down it was the security of the pension that let me sleep at night .

 

[kyounge1956]

I'm almost 55. Since my current earnings are less than the pension, I'd take that. Barring the (IMO) unlikely fall of the U.S. government, I'd be guaranteed never to outlive my money. I have no spouse or kids, so it doesn't really matter to me that the pension stops when I do. Anyway, since I wouldn't need the whole pension to live on, I could always set aside some of my benefit to leave to my nieces and/or to a favorite charity

 

[ziggy29]

One interesting thing about this poll is that I'll bet if you asked it in (say) 1998, the results would be a LOT different.

 

[martyb]

At what age? At 55, I take the pension. At 70, I take the cash.

I agree with this.

 

[NW-Bound]

Voted not sure.

It's too bad there is no 3rd choice: half and half, meaning $1M in the pocket and $40K/yr COLA'ed.

I am sure someone here has that half-n-half combination.

 

[aaronc879]

At what age? At 55, I take the pension. At 70, I take the cash.

If the pension starts by age 55 then i'll take the pension otherwise i'll retire at 55 or earlier with the $2Million

 

[GregLee]

$2M. Because of the control it gives you. You can diversity your investments, shift money from one asset type to another, make some large capital investment, ... I'm a control freak.

 

[keegs]

The vast majority of us won't have either choice so what's the point?

 

[haha]

I love the comments that any poll or simple question bring out.

Well, it all depends on the meaning of is...

Ha

 

[dex]

To me it is a no brainer - I chose the government option - for the peace of mind standpoint.

Let's assume you retire at 55 and estimate you will live 30 years to 85 - no health care, no social security, and you don't care about leaving any money at death.

Yes, I might be able to manage the $2M over that 30 years to match the government plan. But, I would probably have to spend much of the principle over that time to keep up with the gov't pension and I would have to assume risk.

Think of it this way with the gov't pension -
No risk of default
No market risk - stocks/bond
No bad investment risk (my stupidity)
No aging risk (meaning as I age I might not be able to manage the $)
No potential increase in taxes risk on capital gains, dividends, other stock/bond etc.
No inflation risk

 

[keegs]

Does no healthcare mean no Medicare? If so then is anyone over 60 insurable?

 

[kyounge1956]

The vast majority of us won't have either choice so what's the point?

Maybe you won't have to choose between such a large pension and portfolio, but whatever amount of savings you can realistically think about accumulating, you will have a choice between keeping it as an investment portfolio, using the money to buy an annuity for lifetime income, or some combination of the two. Which looks best to you?