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Old 10-21-2015, 12:32 PM   #41
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Aeowyn's Avatar
Join Date: Jan 2011
Location: Scotts Hill, TN
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Originally Posted by nun View Post
An IRR of 3.7% and a payout rate of 6.2% (using the quoted lumps sums and payouts starting at 55 and assuming an average life span) is better than you will find on the open market.
Thanks for confirming the reason I hate annuitization. IMO the only one that makes out on that transaction is the insurance company.

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Old 10-21-2015, 12:45 PM   #42
Thinks s/he gets paid by the post
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Originally Posted by Aeowyn View Post
Thanks for confirming the reason I hate annuitization. IMO the only one that makes out on that transaction is the insurance company.
Well going with the pension rather than the lump sum is effectively taking an annuity. If you took the lump sum you couldn't buy an lifetime SPIA with better terms, but you would have all the usual options available of how to invest that money. Personally I'd lock in the guaranteed income from the pension in the expectation of living an average lifespan and getting 3.7% annual interest and invest the rest if my portfolio in something like Vanguard Total Stock Market and maybe even se riskier areas

"The needs of the many outweigh the needs of the few, or the one." - Spock
Retired Mar 2014 at age 52
Target AA: 70% equity funds / 28% TIAA-Traditional/ 2% cash
Target WR: 0.0%,
Income from pension, rent, and eventually SS
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