Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 05-13-2015, 10:45 PM   #21
Thinks s/he gets paid by the post
 
Join Date: Sep 2006
Posts: 1,690
Quote:
Originally Posted by JP.mpls View Post
RunningMan,
I'm concerned she will do the same as your father with a cash out, and end up trying to live on just SS.

Her numbers are less than your estimates. I'm guessing $1500/mo. SS, and $750/mo. pension. She has been living on about $2000/month.

I didn't mention that she got caught in a layoff around the age of 60. She has been living on a large severance, unemployment checks, part time work, and drawing down on her 401K to survive.

Started SS about a year ago, and has still been spending some 401K money each month. She can stop touching the 401K to meet monthly expenses with the monthly pension check.

Regarding the mortgage. It is at a very low interest rate. She got some type of low income refinancing.




JP
Then anything you could do to have her take the pension and stop spending what savings she has left to let grow would be doing her a retirement favor. Even if a few years from now she wishes she had more to spend the extra $750 locked in is worth so much more than straight SS alone, as that $750 is tax free from federal.
__________________

__________________
Running_Man 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 Early-Retirement.org 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 05-13-2015, 11:08 PM   #22
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2013
Posts: 5,326
There are many pros and cons as other have discussed. A big reason for us to choose the monthly payments was to have additional diversified retirement income streams, and a steady income when we are older (SS plus the pensions checks) we could live of if we ever lost our portfolio income through fraud or loss of mental capacities.
__________________

__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
daylatedollarshort is offline   Reply With Quote
Old 05-15-2015, 06:09 PM   #23
Recycles dryer sheets
 
Join Date: Mar 2011
Posts: 64
Running Man,
You mention the monthly pension check being tax free from the Federal government.
Is that correct? I'm assuming it will be considered income, and she will have to pay taxes.
Are you referring to the fact that her monthly income will be low, and she will pay relatively low taxes?
If she takes the cash out, I see her taking a big chunk for the house, and paying high taxes on it.


My wife told me that she is now leaning toward the pension at this time.
I do appreciate all the comments. I hope it works out for her.




JP
__________________
JP.mpls is offline   Reply With Quote
Old 05-16-2015, 10:39 AM   #24
Recycles dryer sheets
 
Join Date: Sep 2008
Posts: 353
The only pensions that are COLA these days are Gov. type pensions.
Private Co's cant take on that much risk as it may not be sustainable.
I would steer her towards the pension as there isn't much out there at this time with little risk.
I used to be 100% lump sum, until the past few years. Now I see the annuity option as diversity. As she already has her 401k invested I would say the monthly is best for her. I would advise her to live of SS and the annuity and lay off the 401k as long as she can.
__________________
almost there is offline   Reply With Quote
Old 05-16-2015, 11:16 AM   #25
Recycles dryer sheets
 
Join Date: Feb 2013
Posts: 377
I get monthly pension checks, COLA'd and 100% medical paid. I am one of those people who like the security of that monthly check. I was never a seasoned investor and so would have major anxiety every month!
__________________
LinCella is offline   Reply With Quote
Old 05-16-2015, 11:22 AM   #26
Recycles dryer sheets
 
Join Date: Sep 2008
Posts: 353
That's really nice! Was your job state or federal?
__________________
almost there is offline   Reply With Quote
Old 05-16-2015, 11:30 AM   #27
Recycles dryer sheets
 
Join Date: Feb 2013
Posts: 377
Almost there - my job was city. So local agency is what they call it. And my sweet deal is no longer available to employees who started 10 years ago and even less so now. The medical promise really killed the City. So through several contracts they now have a medical savings plan for new employees. Basically you would need to start at 20 and work until 65 to see any amount of money for medical insurance. My city also allowed retirement to be taken at 50, also a great idea in the flush days but not so much now. I was lucky to get into management, not so for many of the City employees who already have lower paying jobs, many will need to work longer.
__________________
LinCella is offline   Reply With Quote
Old 05-16-2015, 11:56 AM   #28
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Chuckanut's Avatar
 
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 6,331
Quote:
Originally Posted by LinCella View Post
I get monthly pension checks, COLA'd and 100% medical paid. I am one of those people who like the security of that monthly check. I was never a seasoned investor and so would have major anxiety every month!
Were you also part of the SS system?
__________________
The worst decisions are usually made in times of anger and impatience.
Chuckanut is offline   Reply With Quote
Old 05-16-2015, 12:11 PM   #29
Recycles dryer sheets
 
Join Date: Sep 2008
Posts: 353
Lin, Glad it worked out! So much changed during our working lifetime / past 35 yrs. its amazing.
Most plans changed mid stream with grandfather clauses, reductions and restrictions.
I left with about 25% of the retirement benefits that I signed up for at a public utility. (80% highest 3 yrs average pay/ pension & 100% medical) at 55. I just had to alter my personal plans 1/2 was into it. No complaints. I left at 51 as I did get retiree medical after 29 3/4 years with the co. That was huge in my mind. I was also mgt / supervision. The union folks did pretty well. They got about the same deal.
For Kaiser med 1/2 dental & 1/2 vision I pay 242.00 / month. They pick up about $800.00 till 65. That combined with the neutered cash balance / annuity option and a 1 yr of pay severance was enough to get me out the door. (Did not know the severance would be treated like a bonus though tax wise, 46%? Ouch. And at the end of the year)
I did put in a couple hundred k into SS. Now the media is trying to make me feel guilty about collecting it. LOL LOL I plan to take that in 8 yrs at 62. And hope they do not try and convince me its an entitlement and ask me to go for a reduced benefit.
__________________
almost there is offline   Reply With Quote
Old 05-16-2015, 12:25 PM   #30
Recycles dryer sheets
 
Join Date: Feb 2013
Posts: 377
Almost There and Chuckanut,

My City doesn't do SS so I am relying on my jobs previous to this one for some SS. Due to the pension I am subject to the WEP (Windfall Elimination). This makes me insane - I'll only get partial what I put in to the system and we're not taking big bucks here. It was when I was a young person just starting out, but the SS will take about 40% away from me. I will take it at 62. There is some legislation in Congress right now to eliminate WEP and I am all for it! I won't make that much SS even if WEP is eliminated.

Oh screw the media! I get such grief from people I know just for having a pension. Did I complain when these Dotcomers made tons of money back then and I had a lowly civil service job? I took the low paying job and now I'm reaping MY benefits.

Also, I don't even mention my pension or medical benefits anymore (except here!)
__________________
LinCella is offline   Reply With Quote
Old 05-16-2015, 12:25 PM   #31
Recycles dryer sheets
 
Join Date: Oct 2011
Location: Upstate Ruralia
Posts: 283
IS she single with no children or dependents, and, has she ever been married?

If she is NOT financially adept, I would recommend the pension. Even if it is NOT COLA'd, SS will be, and with pension and SS if she can swing it, she should.

Pay off the mortgage? Why? If she is single, why deplete savings and eliminate liquidity?

If she can pay her way with SS and pension, I'd leave the money in savings alone, live off the SS and pension, and have a good life.

As long as she can pay ALL her bills from SS and pension, retire and enjoy life.

What if she takes the lump sum and loses it to taxes and ridiculous spending? I know people who are doing just that. They are going to be in a world of hurt down the road.

With the pension and SS, the checks will be there every month til she dies, including when this market turns downward. Not having to stress about paying her expense when (not if) that happens.....priceless.

PS-Her pension appears to be WAY below the threshhold for the PGBC limits, and it is from a Megacorp...wouldn't worry if I were her.
__________________
Lcountz is offline   Reply With Quote
Old 05-16-2015, 12:40 PM   #32
Full time employment: Posting here.
 
Join Date: Apr 2015
Posts: 903
Quote:
Originally Posted by Chuckanut View Post
Were you also part of the SS system?
Most local agencies don't pay into SS.

@LinCella
Ouch on retirement medical for newer hires. Medical really is a big burden on pension systems. A few years back, we started contributing an extra 4% for medical. For our system (Tier 1), those under age 65 need 25 years of service for full medical reimbursement (but only for single party premium, I think). Those retiring at 65 or older only need 20 years to get 100% reimbursement for Medicare Part B premiums (we don't pay SS but we do pay 1.45% for Medicare).

At least I was lucky enough to still be in Tier 1. Tier 2 employees have greatly reduced pension benefits. For Tier 1, as long as you have 30 years of service, you can retire at age 55 with full pension (ER starts at 45 but with reduction factor). For Tier 2, normal retirement has been pushed back to 65 years old.

Really not sure what they're going to do about the brain drain, though. Government usually pays a lot lower than private but at least before, the benefits were really nice. Now, Tier 2 pension benefits are not attractive at all. Oh well, at least employee medical is still good. For married couples, I think our health insurance is like $1000-2000 away from being considered a "Cadillac" plan.
__________________
hnzw_rui is offline   Reply With Quote
Old 05-16-2015, 12:53 PM   #33
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 7,379
Quote:
Originally Posted by hnzw_rui View Post
Most local agencies don't pay into SS.



@LinCella

Ouch on retirement medical for newer hires. Medical really is a big burden on pension systems. A few years back, we started contributing an extra 4% for medical. For our system (Tier 1), those under age 65 need 25 years of service for full medical reimbursement (but only for single party premium, I think). Those retiring at 65 or older only need 20 years to get 100% reimbursement for Medicare Part B premiums (we don't pay SS but we do pay 1.45% for Medicare).



At least I was lucky enough to still be in Tier 1. Tier 2 employees have greatly reduced pension benefits. For Tier 1, as long as you have 30 years of service, you can retire at age 55 with full pension (ER starts at 45 but with reduction factor). For Tier 2, normal retirement has been pushed back to 65 years old.



Really not sure what they're going to do about the brain drain, though. Government usually pays a lot lower than private but at least before, the benefits were really nice. Now, Tier 2 pension benefits are not attractive at all. Oh well, at least employee medical is still good. For married couples, I think our health insurance is like $1000-2000 away from being considered a "Cadillac" plan.

My elderly neighbor retired from a utility and was in a small window of retirees who received lifetime health benefits. He told me management was poking around looking for a hole to get out from under it a few years back and their lawyers told them it would be cheaper to let them die off than fight it. Now he says he wants to live as long as possible just to stick it to them.


Sent from my iPad using Tapatalk
__________________
Mulligan is offline   Reply With Quote
Old 05-16-2015, 01:09 PM   #34
Recycles dryer sheets
 
Join Date: Feb 2013
Posts: 377
The Brain Drain is a real problem in my city. Since we can retire early, people in their 50's and early 60's are gone taking with them years of great experience. However, my workplace, the public library, was more than happy to get rid of the "dinosaurs" - their term not mine! I was a fantastic librarian and these young folks - albeit not a drain on the city coffers now - still have very little experience. I go in as a customer now and cringe when I hear these young librarians try to answer questions...I want to jump in but as a "dinosaur" that would be dangerous.
__________________
LinCella is offline   Reply With Quote
Old 05-16-2015, 01:11 PM   #35
Recycles dryer sheets
 
Join Date: Feb 2013
Posts: 377
Mulligan - our paid medical is a contractual issue. However, my city has never changed the terms of any retiree's contract under which they retired. However, being in California there are many who want to take away my pension entirely!
__________________
LinCella is offline   Reply With Quote
Old 05-16-2015, 01:17 PM   #36
Recycles dryer sheets
 
Join Date: Sep 2008
Posts: 353
"Did I complain when these Dotcomers made tons of money back then and I had a lowly civil service job? "

That's about the time I thought I was a stock guru as my benefits evaporated about the same time(1999) . Still have $20k in losses I deduct from my tax's every year from the dot com boom. A couple thousand at a time. I sure miss those days......... LOL LOL
__________________
almost there is offline   Reply With Quote
Old 05-16-2015, 03:02 PM   #37
Full time employment: Posting here.
 
Join Date: Apr 2015
Posts: 903
Quote:
Originally Posted by LinCella View Post
The Brain Drain is a real problem in my city. Since we can retire early, people in their 50's and early 60's are gone taking with them years of great experience. However, my workplace, the public library, was more than happy to get rid of the "dinosaurs" - their term not mine! I was a fantastic librarian and these young folks - albeit not a drain on the city coffers now - still have very little experience. I go in as a customer now and cringe when I hear these young librarians try to answer questions...I want to jump in but as a "dinosaur" that would be dangerous.
It's not even just the retirees. Every year, we have highly skilled and trained scientific and technical professionals who leave for greener pastures because there hasn't been COLA for years and City pay is lower in comparison.

Quote:
Originally Posted by LinCella View Post
Mulligan - our paid medical is a contractual issue. However, my city has never changed the terms of any retiree's contract under which they retired. However, being in California there are many who want to take away my pension entirely!
Not sure they can, though. I guess that's the primary reason Tier 2 was instituted. I think for our system, previously earned medical benefits is also a contractual issue. However, if we didn't agree to pay 4% for retiree health, they would have capped the subsidy amounts at existing levels (which probably wouldn't be worth much after 20 years of rapidly rising health care costs).
__________________

__________________
hnzw_rui is offline   Reply With Quote
Reply


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
People are cashing out their retirement accounts to pay for "emergencies" JustCurious FIRE and Money 42 07-21-2008 05:59 PM
Cashing Out shiny FIRE and Money 11 07-14-2008 10:14 AM
boomers cashing out ER_Hopeful FIRE and Money 20 05-08-2008 09:49 AM
Cashing out home equity to invest in Mutual Funds ADJ FIRE and Money 83 05-10-2007 01:16 PM
Cashing in, Opting out moghopper Life after FIRE 0 08-28-2005 07:15 AM

 

 
All times are GMT -6. The time now is 06:24 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.