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Help w/Pension Estimate
Old 04-03-2015, 09:53 AM   #1
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Help w/Pension Estimate

I am looking for an estimate for my pension payout if I start at age 55 instead of 65.

When I turn 65, the payout is $46,000/year.

Would it be reasonable to "guestimate" conservatively $20,000/year if payout begins at 55?

Or is there a calculator that could help me out with that. I prefer to avoid asking the HR folks at this point.

It's non COLA and I no longer work for this company so the numbers are not moving.

Thanks!
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Old 04-03-2015, 09:58 AM   #2
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I'm not sure anyone can help you with that. Plans vary, I know for me crossing 60 made a huge difference that was only marginal in other years. I think you have to ask for this info from HR, no matter your preference not to....
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Old 04-03-2015, 10:45 AM   #3
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The only way to find out is to ask the plan administrator what your benefits would be at 55.
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Outside the Box access to Pension Information
Old 04-03-2015, 12:59 PM   #4
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Outside the Box access to Pension Information

Quote:
Originally Posted by Rex View Post
I am looking for an estimate for my pension payout if I start at age 55 instead of 65.

When I turn 65, the payout is $46,000/year.

Would it be reasonable to "guestimate" conservatively $20,000/year if payout begins at 55?

Or is there a calculator that could help me out with that. I prefer to avoid asking the HR folks at this point.

It's non COLA and I no longer work for this company so the numbers are not moving.

Thanks!
We could point out to you sites that describe what an "actuarially fair" reduction would be, but again your employer may be more/less generous than this curve. Your estimate may be reasonable if your company's age-reduction are based on an actuarial fair curve such as the one at PBGC. (ie receiving 45% of your benefit starting at age 55 vs age 65)
Your guesstimate ratio is about 43.5%. As another point of reference, my former employee would pay me 43.1% for taking my deferred vested pension at age 55 vs age 65. All of these examples were based upon a single life annuity (ie no surviving spouse/benfeciary).


Is there no web site associated with your pension plan that you can log into to verify your accrued benefit to date and model payouts that you would receive based on different starting dates? Having access to our websites that include the written Summary Plan Description (SPD) ie the written terms and the modeler has been very useful.

Another alternative to get information if you remain anonymous is to lookup the annual public form 5500 filing that your plan makes every year to the Department of Labor (DOL) in Washington. These annual reports will often include full actuarial assumptions and terms of the plan. It may be easier to find your plan if you know the 9 digit federal EIN number of the plan. I was able to find pdf files containing at least a hundred pages of information.
Here is an overview of the service at a pension blog.

There is no need to login/nor create an id for this site if you are not uploading information as a representative of the plan.

Happy Hunting!

-gauss
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Old 04-03-2015, 03:53 PM   #5
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My Megacorp pension has a 5% reduction per year you take earlier.

The number of years you can "start earlier" varies depending on if the person quit or was involuntarily let go.

Obviously plans differ. Hope this helps.
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Old 04-03-2015, 04:14 PM   #6
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There is probably not going to be a calculator that will help you, unless there's one provided by your former employer that uses the same rules as your pension plan. I know that my own pension plan enforced draconian age reduction penalties between ages 55 and 57, but then provided reasonably close to the full retirement benefit for long time employees. It almost seemed to me that they were encouraging people to take early retirement at 57.

So, even if your guestimate of $20k per year at age 55 is correct, it won't tell you about how uniformly benefits increase with age. There's a big incentive to wait two years if the pension increases from $20k at 55 to $40k at 57, not so much if the increase is only from $20k to $24k.
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Old 04-06-2015, 09:42 AM   #7
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is this a public or private pension plan?
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Old 04-06-2015, 09:47 AM   #8
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It's a private pension. No COLA.

I have the calculation sheet with the options available at age 65. I got that when I left the company 4 years ago. There is no online calculator.

Thanks to all for the info.
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Old 04-06-2015, 10:04 AM   #9
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google efast lookup and pull up the form 5500


the schedule sb should describe the ER factors


the 5500 will have the plan administrator contact info so you can call them and request an estimate


good luck
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Old 04-06-2015, 10:35 AM   #10
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Good information. I didn't know that was online.
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Old 04-06-2015, 11:20 AM   #11
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This doesn't necessarily apply to the OP, but if I retired on my 55th birthday my non-COLA'd Megacorp pension would be about $33K/yr if I took it immediately, but would grow to a bit over $51K if I delayed commencement until 65. So the hit from taking it 10 years early seems a bit less than the OP suggests (but, of course, his plan may differ).

For a variety of reasons I'm now thinking it will be optimal for me to delay starting my pension after retirement, but only for a year or two.
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Old 04-06-2015, 11:38 AM   #12
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Great Info...

So, I found the pension document on the efast site.

The calculation was very straightforward and did not have any type of gotchas for pre-65 calculations.

If I choose to take the payouts beginning at age 55, it's $18k a year vs. $42k at age 65.

It turns out to be 43% of my "age 65" number and was close to what I guessed.

Thanks again for the help and info and all that responded!
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Old 04-06-2015, 01:54 PM   #13
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Rex, just tossing numbers:


If the pension at age 55 is $18k, and then $42k if you wait until age 65, other questions to ask yourself.


What happens if you don’t make it to age 65? Is there some guaranteed cumulative payout, or does the entire unpaid amount go “poof”?


How certain are you of your prospective lifespan from 65 on?


Ten years of $18k/yr is $180,000. The per year difference gained by waiting until 65 is $24,000.


As a preliminary comparison, if the $180,000 was cash, stashed in a box, that you started pulling $24,000 out of at age 65, the early pension could be supplemented to match the “full” pension for 7.5 years (until your age 72.5). Ignoring investment profit and inflation, if you believe you will live past 72.5 then waiting might be in order.


If you took the pension at age 55, what might you invest it in?
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Old 04-06-2015, 04:12 PM   #14
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Unno....

good stuff and I think you nailed the questions that need to be considered with the early vs later pension question.

I am 4 years away from the big 55 and still doing the w**k thing but I am getting close and am studying all the options.

I have my year by year spreadsheet for the portfolio and I always popped the pension in at age 65. When I pop it in at 55, it, of course, makes a big dent in my WR. But agree....lots to consider with the pension options and timing.

Either way, it's a big part of the ER quest!
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Old 04-06-2015, 05:17 PM   #15
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One consideration taking it now, if still while you are working, is that you will pay tax on that pension money at your top tax rate. If at 55 you are not working this wouldn't be an issue.
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Old 04-07-2015, 03:17 PM   #16
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Quote:
Originally Posted by Rex View Post
Unno....

good stuff and I think you nailed the questions that need to be considered with the early vs later pension question.

I am 4 years away from the big 55 and still doing the w**k thing but I am getting close and am studying all the options.

I have my year by year spreadsheet for the portfolio and I always popped the pension in at age 65. When I pop it in at 55, it, of course, makes a big dent in my WR. But agree....lots to consider with the pension options and timing.

Either way, it's a big part of the ER quest!
In many plans, the day you stop work has nothing to do with when you start to draw your pension. Obviously many people do not have other sources of income and thus will start the pension right away. I am personally holding off until 65 to draw the pension even though I have stopped working already. I have access to after-tax savings to live on in the interim and can always engage in some self-employed income if sufficiently motivated.

Just wanted to make sure that you know these two events, 1) stopping working and 2) drawing pension do not have to happen at the same time usually.

-gauss
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Old 04-07-2015, 04:50 PM   #17
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sometimes a plan will require you to separate service after attaining a certain age/service threshold to get an ER subsidy
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Old 04-08-2015, 09:24 PM   #18
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Originally Posted by Big_Hitter View Post
sometimes a plan will require you to separate service after attaining a certain age/service threshold to get an ER subsidy
Agreed.

My post above assumed that you separate service prior to drawing pension at some point.

-gauss
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Old 04-08-2015, 09:48 PM   #19
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Its all static. I left the company 4 years ago.

I found the formula and have the amount for age 55.

All good thanks to this forum.
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Old 04-16-2015, 01:35 PM   #20
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glad to be of assistance


I like pensions
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