Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Lump Sum Offer
Old 09-20-2014, 01:28 PM   #1
Dryer sheet aficionado
Join Date: Jun 2014
Posts: 25
Lump Sum Offer

A previous employer has announced they will be offering a lump sum option shortly, in lieu of the established pension plan. Details regarding the dollar amounts are in the mail. I do have the estimate for the established plan, so I'll have something to compare it to- as well as comparable annuity calculations.

What other considerations should I be concerned with? (other than how the offer compares to the existing plan details)

Thanks, GiGi

TresBelle65 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 09-20-2014, 02:26 PM   #2
Thinks s/he gets paid by the post
Car-Guy's Avatar
Join Date: Aug 2013
Location: Citizen of Texas
Posts: 1,705
There have been many threads on this topic in the past few years on this board. You may want to search for those using the advanced search feature with the words "lump sum" in the titles. Lots of related threads.

I had a similar offer a few years ago and took it. The monthly pension would have paid out more (if I lived long enough) but I was worried about the companies long term financial viability. I took it and rolled it into an IRA.

Car-Guy is offline   Reply With Quote
Old 09-20-2014, 02:49 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: May 2005
Posts: 11,453
As mentioned above, company financial viability.... and how well funded the pension plan is...

Other than that I think it is a pretty straight what is worth more to me question....
Texas Proud is offline   Reply With Quote
Old 09-20-2014, 06:18 PM   #4
Thinks s/he gets paid by the post
Join Date: Mar 2011
Posts: 2,890
Originally Posted by Texas Proud View Post
As mentioned above, company financial viability.... and how well funded the pension plan is...
I took the lump sum as my company was being sold.

The new company ended up with a less-than fully funded pension and ended up discontinuing the pension and paid out lump sums less than original value.

So glad I took the money and ran!
Living well is the best revenge!
Retired @ 52 in 2005
marko is online now   Reply With Quote
Old 09-20-2014, 07:19 PM   #5
Recycles dryer sheets
Join Date: Sep 2013
Posts: 391
Going against the prevailing wisdom here I declined a lump sum offer when it was offered to me at age 52 (in exchange for a pension I will receive at age 65). The offer was about 30% below the equivalent annuity value of the pension and I was unwilling to take that hit. As the pension is non-COLA'd, should inflation rise dramatically over the next decade I may have cause to regret that choice.

It's only fair to point out that I was willing to take that gamble as this pension represents a fairly small fraction of my net worth (3-5%). If my retirement critically depended on it I may very well have taken the more conservative choice and accepted the lump sum.
stepford is offline   Reply With Quote
Old 09-20-2014, 08:12 PM   #6
gone traveling
Join Date: Oct 2007
Posts: 1,135
Sometimes having some guaranteed income late in life / annuitized income for a best case longevity scenario is a good idea.

That monthly pension check along with SS check is a good way to do so without "buying" an annuity outright.

It may look good 25 years from now especially if we were to experience a japan like decades long stock market malaise. For the past 6 years, I keep hearing that were about to hit escape velocity in the economy - at some point if we don't... Then equity prices reset etc. Low probability but since it's a tiny portion of your portfolio it may be wise to think differently.

Eg... ~75k lump sum now being offered or 1100 non cola dollars per month at age 65 ( 18 years from now). While the lump sum looks ok, I like the pension option as a "cheap" insurance policy If pension is well funded .

The rest of the portfolio can take care of things if inflation spikes ...

Eggs in different baskets is my general idea here.

Sent from my iPhone using Early Retirement Forum
papadad111 is offline   Reply With Quote
Old 09-20-2014, 10:03 PM   #7
rodi's Avatar
Join Date: Apr 2012
Location: San Diego
Posts: 6,742
I have two very small pensions. One was available for lump sum - but the value is so much less than the annuity it will pay... The other doesn't have the lump sum option. Neither are cola'd. I chose to keep them in pension form and will "turn on" the spigot at age 55 - in 2 years.
rodi is offline   Reply With Quote
Old 09-21-2014, 06:56 AM   #8
Recycles dryer sheets
Join Date: Dec 2009
Posts: 262
Many excellent posts on the topic in this forum. Also take a look at the Boglehead forum. Here's a place to start
Bogleheads • View topic - 10 Reasons to take your pension annuity over a lump sum

zedd is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
Pension Lump Sum Offer 2B FIRE and Money 8 10-15-2012 07:51 AM
Take Lump Sum and accept new job offer? PnJL Hi, I am... 7 07-06-2011 05:55 PM
Lump sum to invest, DCA in or go lump? Olav23 FIRE and Money 4 03-03-2007 03:22 PM
Lump sum investment Billy FIRE and Money 7 04-17-2004 04:13 PM
Annuity vs Lump Sum Pension moguls FIRE and Money 5 05-26-2003 02:09 PM


All times are GMT -6. The time now is 09:20 AM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2016, vBulletin Solutions, Inc.