Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Old 07-06-2016, 08:05 PM   #41
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Big_Hitter's Avatar
 
Join Date: May 2013
Location: Les Bois
Posts: 5,761
Quote:
Originally Posted by RobbieB View Post
Please do and submit your synopsis. I ain't gonna read that manuscript either.

Pulp fiction is more my taste -
you guys want cliffs notes? geez
__________________
You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
Big_Hitter 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 07-06-2016, 08:11 PM   #42
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Mar 2016
Posts: 8,968
Rough time eh?

You should know better than to promote annuities here, it's just like suggesting the employment of financial advisors -
RobbieB is offline   Reply With Quote
Old 07-06-2016, 08:14 PM   #43
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Big_Hitter's Avatar
 
Join Date: May 2013
Location: Les Bois
Posts: 5,761
Quote:
Originally Posted by RobbieB View Post
Rough time eh?

You should know better than to promote annuities here, it's just like suggesting the employment of financial advisors -
I'm just suggesting they be added as a distribution option to DC plans so you and I don't have to bail everyone out in 15 years. it's just an optional layer of protection

otherwise, in a dc-only world we will have a nation of destitute retirees
__________________
You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
Big_Hitter is offline   Reply With Quote
Old 07-06-2016, 09:27 PM   #44
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,263
Can't just about anyone with a DC plan either buy and annuity or roll their DC balance into an IRA and buy an annuity? From what I know they effectively already have that option.

From what I can tell you like annuities and are probably disappointed that so few people utilize that option where they have it or decide not to buy annuities. That's fine, and there are some people who would prefer to require some annuitization to prevent people from being stupid... I don't agree but respect their right to an opinion.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline   Reply With Quote
Old 07-06-2016, 09:33 PM   #45
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Big_Hitter's Avatar
 
Join Date: May 2013
Location: Les Bois
Posts: 5,761
Quote:
Originally Posted by pb4uski View Post
Can't just about anyone with a DC plan either buy and annuity or roll their DC balance into an IRA and buy an annuity? From what I know they effectively already have that option.

From what I can tell you like annuities and are probably disappointed that so few people utilize that option where they have it or decide not to buy annuities. That's fine, and there are some people who would prefer to require some annuitization to prevent people from being stupid... I don't agree but respect their right to an opinion.
they can but they pay retail for it (sales loads etc.). in-plan options would be more cost effective. problem is they rarely exist.
__________________
You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
Big_Hitter is offline   Reply With Quote
Old 07-06-2016, 11:07 PM   #46
Recycles dryer sheets
 
Join Date: Jul 2013
Posts: 271
Some people need to look outside their own little world, not everybody has a government pension and SS which are both cola. I have SS and a very small non cola pension at 65 and am likely going to buy a spia annuity with about 15% of my IRA. Then about every 7-10 years reevaluate my finances and buy another small spia if needed for inflation. I'm right on the edge of having enough or running out if thing go bad in the market. I don't think I will have to eat cat food, but hamburger instead of T-bone is okay. The only people who shouldn't think about a annuity are the ones who have cola pensions and more than they could ever hope to spend. The next time we have 2008-09 market what happens if the market doesn't recover like the last 7 years.
alaska55 is offline   Reply With Quote
Old 07-13-2016, 03:24 PM   #47
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,263
Whenever those various lump sum or annuity threads pop up I am always thankful that my former employer's DB plan did not offer a lump sum so I didn't have that decision to make. So today I receive a mailing from them that they will be offering a "lump sum window" in August to October.

They will be sending me details later but I fully expect that it will be a raw deal so I won't take the lump sum, but only time will tell.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline   Reply With Quote
Old 07-13-2016, 03:52 PM   #48
Thinks s/he gets paid by the post
Cobra9777's Avatar
 
Join Date: Jul 2012
Location: Texas
Posts: 3,024
Quote:
Originally Posted by Big_Hitter View Post
yeah I'll work on it. just got off the golf course, my back hurts and I need a cold one

basically it has to do with uncertainty and risk pooling
Ah, I remember this thread... Big_Hitter has some homework.
__________________
Retired at 52 in July 2013. On to better things...
AA: 85/15 WR: 2.7% SI: 2 pensions, SS later
Cobra9777 is offline   Reply With Quote
Old 07-13-2016, 04:48 PM   #49
Thinks s/he gets paid by the post
Just_Steve's Avatar
 
Join Date: Apr 2016
Location: Dutchess County
Posts: 1,599
Quote:
Originally Posted by pb4uski View Post
Whenever those various lump sum or annuity threads pop up I am always thankful that my former employer's DB plan did not offer a lump sum so I didn't have that decision to make. So today I receive a mailing from them that they will be offering a "lump sum window" in August to October.

They will be sending me details later but I fully expect that it will be a raw deal so I won't take the lump sum, but only time will tell.
I'm also thankful I wasn't offered a lump sum and if they sent an offer now I might throw it into the shredder without even looking at it.
Just_Steve is offline   Reply With Quote
Old 07-14-2016, 12:49 PM   #50
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 4,629
From a public policy perspective, I have to agree with BH. I think it would be good if DC plans routinely offered an annuity option.

I think it would be even better if active workers got annual reports that provided their current balance, and the monthly income the current balance would buy if it could be used for a "standard" annuity today.

For some people, "annuity" is a scary word that sounds complicated (and, most of us will agree that some private sector variable annuities are both complicated and scary). Seeing it mentioned might get people over that hump so they can think about their choices.

One reason I'd like to do this is that I think it's easy to look at lump sums and unrealistically think I'm ready to retire. Looking at monthly incomes is sobering.
Independent is offline   Reply With Quote
Old 07-14-2016, 01:50 PM   #51
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
kcowan's Avatar
 
Join Date: Jul 2006
Location: Pacific latitude 20/49
Posts: 7,677
Send a message via Skype™ to kcowan
I was offered an immediate pension in 92 at age 49. I took it! The next year they had another offer and the immediate pension was not included. I think they realized what I had. The immediate pension was by far the best deal.

I think they were working on retirement statistics but had no experience with such young retirees. Apparently, retiring at 49 increases your longevity compared to 65. So their assumptions were wrong! Meanwhile I am still collecting after 25 years with no end in sight. My Dad lived to be 95.
__________________
For the fun of it...Keith
kcowan is offline   Reply With Quote
Old 07-15-2016, 01:56 PM   #52
Gone but not forgotten
imoldernu's Avatar
 
Join Date: Jul 2012
Location: Peru
Posts: 6,335
Reading this thread made me take another look at the small annuity that DW's mom left to each of her kids.

The more I read, the more I get confused. Anyway, here's the status:
Annuity bought in 1990 for $8000. (Inflation since then would make that $14K, today).

Just received a statement that lists this:
Inception to date $8000.00
NonQualified Annuity Type
Guaranteed Income Account $0.00

Fixed Account
Ending accumulated value... $55,030.00
Surrender Value... $51,390.00
Annuity Value... $60,685.00

A year ago, I called to see what my options were. At first I was told that I could take the full amount out over a 5 year period, but got a call back saying that it would have to be over a 10 year period.

Since we've been in a balanced income tax situation (no taxes) for the past 24 years, am not sure what we'll be looking at 'taxwise" by withdrawing the surrender value, but think unless we win a lottery, that we'll be in the lowest tax bracket.

Taking the annuity over the 10 years? Not likely to live that long. At the present, no need for the money, so thinking to just leave it as a reserve and add the guaranteed 4%/yr. Plus... no aggravation.

At age 80, with reasonable health, but not great genes, this isn't a big deal, but wonderin' if there's a simple way to make sense of the options, and what the difference is between Annuity, Accumulative and Surrender values.
__________________
If you want others to be happy, practice compassion. If you want to be happy, practice compassion.
--Dalai Lama XIV
imoldernu is offline   Reply With Quote
Old 07-17-2016, 05:36 AM   #53
Thinks s/he gets paid by the post
 
Join Date: Jan 2014
Posts: 1,174
Quote:
Originally Posted by imoldernu View Post
Annuity bought in 1990 for $8000. (Inflation since then would make that $14K, today).

Fixed Account
Ending accumulated value... $55,030.00
Surrender Value... $51,390.00
Annuity Value... $60,685.00

A year ago, I called to see what my options were...I could take the full amount out over...a 10 year period.

...wonderin' if there's a simple way to make sense of the options, and what the difference is between Annuity, Accumulative and Surrender values.
Accumulated Value: Initial investment plus gains.

Surrender Value: Accumulated value less surrender charges. This is the amount you would receive if you cashed out. Some contracts will allow you to withdraw 10% each year without penalty. If you do not need the principal, just continue to earn the safe 4% return.

Annuity Value: If you take the 10 year payout, you have converted the deferred annuity into an immediate annuity. This is the present value of the immediate annuity.
MBSC is offline   Reply With Quote
Old 07-17-2016, 06:01 AM   #54
gone traveling
 
Join Date: Apr 2011
Posts: 3,375
Quote:
Originally Posted by Tandemlovers View Post
We opted for the annuity over a lump sum for a number of reasons:

The lump sum was a modest amount, and by using the Immediate Annuities website, we could see that the monthly payout amount that the company offered was better than what could be purchased on the open market.

The pension payment amount is low enough to be protected under the Pension Benefit Guarantee Corporation, should the pension fail in the future.

The lump sum break even amount, not adjusted for inflation, was 16 years. We have a good likely hood of living at least that long, especially since we are separated in age by nine years.

We liked the idea of having three legs of the retirement stool in place: a pension, ss, and retirement savings.

The only downside to taking the annuity was that the monthly amount is not adjusted for inflation.
Sounds well thought out & you're satisfied. Pretty much all that matters. Good job.
gerntz is offline   Reply With Quote
Old 07-17-2016, 06:04 AM   #55
gone traveling
 
Join Date: Apr 2011
Posts: 3,375
Maximizing our SS annuity is enough annuity for us we believe.
gerntz is offline   Reply With Quote
Old 07-17-2016, 06:23 AM   #56
Thinks s/he gets paid by the post
 
Join Date: Dec 2009
Location: Alberta/Ontario/ Arizona
Posts: 3,393
Well, I was given an offer to annuitize my retiring allowance. I made the decision 3 years before I actually retired. I chose the pension and very glad I did. This pension represents almost 50% of our income in retirement with a full survivor benefit. I think they were pretty generous in the offer, but disregarding that, having a large pension gives me the ability to take a more aggressive investing position. So far ( 10 years into retirement) it has worked out very well in all respects. Pensions are great to have if the cost is fair.
Danmar is offline   Reply With Quote
Old 07-17-2016, 07:12 AM   #57
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,263
Quote:
Originally Posted by imoldernu View Post
Reading this thread made me take another look at the small annuity that DW's mom left to each of her kids.

The more I read, the more I get confused. Anyway, here's the status:
Annuity bought in 1990 for $8000. (Inflation since then would make that $14K, today).

Just received a statement that lists this:
Inception to date $8000.00
NonQualified Annuity Type
Guaranteed Income Account $0.00

Fixed Account
Ending accumulated value... $55,030.00
Surrender Value... $51,390.00
Annuity Value... $60,685.00

A year ago, I called to see what my options were. At first I was told that I could take the full amount out over a 5 year period, but got a call back saying that it would have to be over a 10 year period.

Since we've been in a balanced income tax situation (no taxes) for the past 24 years, am not sure what we'll be looking at 'taxwise" by withdrawing the surrender value, but think unless we win a lottery, that we'll be in the lowest tax bracket.

Taking the annuity over the 10 years? Not likely to live that long. At the present, no need for the money, so thinking to just leave it as a reserve and add the guaranteed 4%/yr. Plus... no aggravation.

At age 80, with reasonable health, but not great genes, this isn't a big deal, but wonderin' if there's a simple way to make sense of the options, and what the difference is between Annuity, Accumulative and Surrender values.
One thing that doesn't make sense in what you posted is the surrender value... it would be very unusual in my experience that a 26 year old annuity would still have surrender charges... they typically grade out over 10-15 years.

Nonetheless, if the only premium was the single $8k in 1990 then you have done quite well. If the guarantee is 4% then I would leave it where it is if you don't need the cash.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline   Reply With Quote
Old 07-17-2016, 10:10 AM   #58
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Apr 2010
Posts: 5,858
I had the option of non inflation adjusted DB pension or a commuted value. I took the DB pension for three reasons and am happy with the decision.

The DB pension formed a guaranteed leg on my three legged financial plan. It was one I could count on if my investments went south. It also had the benefit of life insurance for my spouse given my selection of a 75 percent survivor pension. I also had a supplementary pension but was unable to take this as an annuity. It had to be paid out in annual lump sums over three years and taxed as income. We may choose to annuitize the after tax amount in our later years IF the interest rates are higher.

The other benefit it has provided is that we feel free to spend money on travel etc. without the worry of what will happen to our income if the market goes south. This has actually made our retirement more enjoyable and certainly more worry free.

I am in excellent health and there is longevity in my family. Certainly, if this had not been the case, I would have opted for the commuted value, notwithstanding the tax implications for me with this decision.
brett is offline   Reply With Quote
Old 07-17-2016, 10:55 AM   #59
Moderator
rodi's Avatar
 
Join Date: Apr 2012
Location: San Diego
Posts: 14,169
I just pulled the trigger on my pension to start the month after my 55th birthday (soon). I did the analysis again - and the lump sum was the opposite of a good deal. If I were to use the lump sum to buy a fixed annuity non-cola - it would by about 1/2 the amount/month of the fixed annuity non-cola being offered. I'm taking the pension/annuity.

We're not talking huge numbers here... Less than $500/month... But, hey, it's something.
__________________
Retired June 2014. No longer an enginerd - now I'm just a nerd.
micro pensions 6%, rental income 20%
rodi is offline   Reply With Quote
Old 08-22-2016, 02:43 PM   #60
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,263
Quote:
Originally Posted by pb4uski View Post
Whenever those various lump sum or annuity threads pop up I am always thankful that my former employer's DB plan did not offer a lump sum so I didn't have that decision to make. So today I receive a mailing from them that they will be offering a "lump sum window" in August to October.

They will be sending me details later but I fully expect that it will be a raw deal so I won't take the lump sum, but only time will tell.
Update - I got the lump sum offer in the mail the other day... as I suspected, it was a rip off.

We're likely to select the 100% survivor with 10 years guaranteed.

If I input the pension benefit amount into Vanguard's annuity quote website, the values of the annuity (single premium) are 130% to 144% of the amount offered for the lump sum. If I input the lump sum as a single premium like I was using the proceeds of the lump sum to buy a joint life annuity with 10 years guaranteed, then the monthly annuity benefit is 68% to 75% of what my monthly pension benefit would be.

Unless one is in really poor health, you would be a fool to take the deal.... but I am sure some of my former co-workers will be bug-eyed by a big honking number and go for it.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
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
Times when I have large sums to invest are when markets are at all-time highs :/ RioIndy FIRE and Money 5 02-28-2014 06:19 PM
Interest Rates, Lump Sums and leaving Mega Corp Tekward FIRE and Money 2 05-10-2013 01:30 PM
Do you handle lump sums differently? SecondCor521 FIRE and Money 32 10-18-2010 05:45 PM
Firecalc lessons on drip feeding lump sums ? johng FIRECalc support 2 06-13-2009 03:33 PM
Anyone Hear This on Pension Lump Sums? RetireeRobert FIRE and Money 2 12-03-2007 04:46 PM

» Quick Links

 
All times are GMT -6. The time now is 09:48 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.