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Another Lump Sum or Not :-)
Old 08-08-2016, 07:12 PM   #1
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Another Lump Sum or Not :-)

So, getting closer ...

As a portion of my package (left over from a company that was acquired by the company I now work for), I have an option for $495K lump sum or an annuity of $2457/mo with 100% Joint and Survivor assignment.

This represents about 45% of my available package - the other portions are annuity only.

I was just gonna take the lump on one part since the annuity is the only method on the second part. Kinda split the decision process? Not scientific, but ...

I know the annuity question is a standard one, but my circumstances are a bit different ...

Would appreciate everyone's thoughts.
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Old 08-08-2016, 10:26 PM   #2
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You can see what annuity you can buy at https://www.immediateannuities.com/ to have an ball park figure of how fair this choice is.

The 100% survivorship is nice, if you are married.

Without knowing the fairness of the annuity, my personal preference would be some annuity and some lumpsum, unless of course you already have a lot of savings.
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Old 08-08-2016, 10:31 PM   #3
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They're offering you a better deal than me (roughly $400K for $3K/mo), but even so the lump sum is significantly less than the value of the annuity. Unless your savings are limited and/or the solvency of the company is dubious I'd be tempted to stick with the pension.
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Old 08-08-2016, 11:19 PM   #4
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If both pensions are from the same company, and depending on your age, you may be running into the limit of the PBGC guarantee. That would push me toward the lump sum.
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Old 08-09-2016, 04:44 AM   #5
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OK ...great thoughts and I had not considered the the limits re the gov sponsored guarantee.

My 401k is several times the size of the pension lump sum component and I have a military retirement ...and pretty significant savings, as well (we have long been savers).

The pension is with a large aerospace company that funds to a high percentage.

Am leaning towards the annuity since it is pretty good relative to buying an annuity.


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Old 08-09-2016, 05:05 AM   #6
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It sounds like you're in great shape either way you go, so congrats on that.

I had a similar decision to make recently, and even though I was within the limits of the PBGC backstop, I ended up taking the lump sum. I'm still not positive I made the right decision. Something about a monthly paycheck is quite attractive.

By the way, I worked for a company that went through bankruptcy after an ugly debt-financed takeover, so it made me sensitive to what the PBGC limits are.

Fortunately, DW and I are also in pretty good financial shape, so the decision is likely to have a greater effect on our heirs.

One more thing: I really liked my job, but retirement is great!
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Old 08-09-2016, 05:38 AM   #7
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SbS,

Same boat!

Just re checked buying annuity with the 495k ...about 380 a month difference ...15% ...pretty darn significant.


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Old 08-09-2016, 07:04 AM   #8
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If I had those savings I would keep the annuity in a heartbeat. Especially with the 10% survive guarantee.
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