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Old 05-16-2012, 09:37 PM   #21
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When my husband retired he had the choice of a lump sum or non-Cola pension. We took the lump sum. The reasoning was that if we wanted an annuity (which is what the pension basically is) we could always buy one. But, if we took the pension we couldn't always get the lump sum. (We did roll it over to an IRA of course).

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Old 05-17-2012, 01:16 AM   #22
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Please can you explain why the OP is not a good candidate for an annuity ? In his shoes I would take it....
Originally Posted by 2B View Post
I would take the cash. You are not a good candidate for an annuity.

Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
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Old 05-17-2012, 03:56 AM   #23
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Originally Posted by obgyn65 View Post
Please can you explain why the OP is not a good candidate for an annuity ? In his shoes I would take it....
I wouldn't say he isn't a good candidate. However, he has multiple source of a COLA income so he doesn't necessarily need another source.

Looking at a couple of annuity calculators it appears you can get a around $2k/month for a $430K annuity at your age. I don't know your health particulars so I'd recommend check out some of the annuity calculators on the web. Generally speaking annuities offered by employers offer slightly better rates (a few percent) better than annuities sold directly and modestly better than ones sold by insurance agents.

If I had kids or other reasons to leave an estate. I'd definitely take the lump sum given your other sources of income. Even if you don't have kids, I think Midpacks logic is spot on. Interest rates are very low now so your monthly payment/ $100k invested will go up the longer you wait. First because of the likely higher rates and second your life expectancy goes down. For all intensive purposes buying an annuity is non reversible option. While you have a good amount saved in the 401K, I know of continuing care homes that require upwards of $750K buyin (it is mostly refundable to the estate) but provide guaranteed continued care. The bottom line is that is easier to take a lump sum and transform it into income than take income and transform it into a lump sum.

The money you have in your 401K should be more than sufficient to let you reach 59.5 without having to go through the hassles of a setting up 72(t).
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Old 05-17-2012, 05:21 AM   #24
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Please can you explain why the OP is not a good candidate for an annuity ? In his shoes I would take it....
Originally Posted by rdjrn View Post
Well,.. I hope to make 90! I feel really good right now health wise, but I have had mulitple DVT's (blood clots) and will be on blood thinners for life. Also been diagnosed with Polycystic Kidney disease, but no symptoms so far so wish me luck on that!

A realistic expectation might be closer to 80?
I don't think he has the "perfect" health I believe is necessary to make the annuity a good risk. Annuities are developed by the insurance companies knowing that only healthy people buy them. In my informal review of some policies in the past, I think the insurance companies assume that a typical 60 yr old will live about 5 years past what would be the median mortality age based on their longevity table.

Also, this annuity offer is pretty normal. I didn't price it out for him and his much younger wife but I suspect he could do just as well in the open market. It would also make sense to defer buying until he and his wife are older.
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
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Old 05-17-2012, 08:23 AM   #25
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Originally Posted by DFW_M5 View Post
Not to hijack the thread, but I am curious if anyone here is aware of or is receiving VA pension benefits. In googling that I found this link: VA Pension for Wartime Veterans and Surviving Spouses and while I am not 65 or disabled in anyway, it would seem to apply if that happened in the future. It appears the key requirements are to have served during wartime (vietnam vet for me), be at least 65 and need additional care at home or via assisted living and does not need to be from a war related injury. There is also be an income threshold after medical expenses but I do not know what that is.

I had never heard about this and it appears many are not aware of this benefit.

Edit: appears your income has to be very low to receive this, so maybe not useful to many on here
We've looked into this for my father in law. He's a WWII vet and some of his mobility issues directly tie back to his injuries that earned him a purple heart.

The caveat isn't just low income... It's bed space. He's wait listed for 2 VA long-term nursing care facilities. Has been for a while. In the meantime my 85 year old MIL takes care of him, with help from us. (We built a wheelchair accessible granny flat to make it easier.)

What has been really nice is the VA hospital acts as an umbrella for his medical care. Lots of folks speak negatively of the VA hospitals - but at least here in San Diego the care has been excellent.

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