Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 09-28-2011, 02:33 PM   #21
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,107
Quote:
Originally Posted by ucb23 View Post
I was doing a search on PLOP's and found this thread and had to register and respond. Everyone that is bashing the PLOP and variable annuity option is missing a BIG piece of the puzzle.

What if JPoucher and his wife are in a car accident a month after he retires? I presume the pension is terminated, nothing will go to his bene's. What if he takes the PLOP of $111,000 and rolls it into a variable annuity? In that case he will get a death benefit, his bene's will receive $111,000 instead of $0.

There are of course other options to consider too. For example, if Jpoucher wanted some long-term care coverage he could purchase an annuity rider and in essence buy LTC insurance using qualified pre-tax money. This would be especially helpful if Jpoucher isn't insurable with straight LTC insurance.

I'm just saying that variable annuities aren't all that bad when the alternative is not having any death benefit. Hopefully Jpoucher listened to his financial advisor and protected his assets for his heirs.
Isn't this a scene from the movie Groundhog Day?
__________________

__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo 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 09-28-2011, 03:01 PM   #22
Thinks s/he gets paid by the post
73ss454's Avatar
 
Join Date: Oct 2004
Location: LaLa Land
Posts: 4,378
Quote:
Originally Posted by ucb23 View Post
I'm just saying that variable annuities aren't all that bad when the alternative is not having any death benefit. Hopefully Jpoucher listened to his financial advisor and protected his assets for his heirs.
Yup, not bad at all. FOR THE SELLER!
__________________

__________________
Work is something you do to get enough $ so you don't have to....Me.
73ss454 is offline   Reply With Quote
Old 09-29-2011, 07:06 AM   #23
Moderator
Walt34's Avatar
 
Join Date: Dec 2007
Location: Eastern WV Panhandle
Posts: 16,539
Oh boy, more popcorn!
Attached Images
File Type: jpg popcorn.jpg (16.7 KB, 66 views)
__________________
I heard the call to do nothing. So I answered it.
Walt34 is offline   Reply With Quote
Old 09-29-2011, 07:42 AM   #24
Confused about dryer sheets
 
Join Date: Sep 2011
Posts: 5
Trust me I'm no annuity salesman and I'm not going to be telling people what a great idea annuities are, but in some cases (like this one), they are better than the alternative.

Taking a public pension is pretty much annuitizing a lump sum with zero death benefit. Don't ya think that everyone that was recommending him to take the "annuitization" option of a pension may have been slightly wrong in this case? You die, money is gone forever. If you take the PLOP at least you can get income off the balance and protect that asset for your heirs. Am I missing something? I guess if he has no heirs that he would like to pass the money on to?
__________________
ucb23 is offline   Reply With Quote
Old 09-29-2011, 08:42 AM   #25
Thinks s/he gets paid by the post
 
Join Date: Apr 2005
Location: Duesseldorf, Germany
Posts: 1,005
Doesn't it boil down to making a guesstimate how long the retiree + spouse will probably live?
If you expect a short time a PLOP and annuity is a good idea.
If the time is long the pension was the better option.
You can try to calculate by using actuary tables on average life spans. But it remains an educated guess.
__________________
chris2008 is offline   Reply With Quote
Old 09-29-2011, 09:12 AM   #26
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2007
Posts: 5,072
Quote:
Originally Posted by ucb23 View Post
... Am I missing something? I guess if he has no heirs that he would like to pass the money on to?
Yes. You do not know all the OPs details.

Most of us do not either and were just offering comments and opinion as requested by the OP.

But it was a bit suspicious to me that he was being told to trade in pension with a cola for a variable annuity... where the goal of the variable annuity (for a retiree) is often to keep up with inflation.

The situation you are describing... (which did not seem to be the OP's main concern) did it ever occur to you that a term life policy might be an option to consider?
__________________
chinaco is offline   Reply With Quote
Old 09-29-2011, 10:19 AM   #27
Confused about dryer sheets
 
Join Date: Sep 2011
Posts: 5
Quote:
Originally Posted by chinaco View Post
Yes. You do not know all the OPs details.

Most of us do not either and were just offering comments and opinion as requested by the OP.

But it was a bit suspicious to me that he was being told to trade in pension with a cola for a variable annuity... where the goal of the variable annuity (for a retiree) is often to keep up with inflation.

The situation you are describing... (which did not seem to be the OP's main concern) did it ever occur to you that a term life policy might be an option to consider?
Good point on the term insurance, didn't consider that. Assuming he's insurable, it would probably be a good idea to weigh the cost of term insurance against the reduction in income if he were to take the PLOP and VA option. I still tend to favor the VA option since he could keep his money invested and have it grow since he will likely be retired for 30ish years.

I guess I was just a little surprised when I initially read the thread that everyone was piling on annuities like they have no place. I know they're expensive, and definitely not for everyone, but I think they can be utilized effectively in some scenarios, this being one of them. Everyone seemed to immediately dismiss the PLOP and annuity idea since annuity is a dirty word around here, but I felt like nobody considered the whole what happens to the PLOP money if I die scenario. It just makes sense to me to take a minimal reduction in income to protect the underlying asset, but obviously I'm in the minority.
__________________
ucb23 is offline   Reply With Quote
Old 09-29-2011, 10:23 AM   #28
Confused about dryer sheets
 
Join Date: Sep 2011
Posts: 5
Quote:
Originally Posted by chris2008 View Post
Doesn't it boil down to making a guesstimate how long the retiree + spouse will probably live?
If you expect a short time a PLOP and annuity is a good idea.
If the time is long the pension was the better option.
You can try to calculate by using actuary tables on average life spans. But it remains an educated guess.
Not necessarily. By taking the PLOP and VA option he likely won't sacrifice too much of his income, but the underlying asset will be there whether he lives 5 years or 50 years in retirement.

It depends more on what his objective is. Is his objective to maximize lifetime income or to get slightly less lifetime income and protect his asset for his heirs? That's what it boils down to in my eyes.
__________________

__________________
ucb23 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
DRINKERs (Dual Retirement Income No-Kids Early Retirement) Kroeran Life after FIRE 58 11-24-2009 07:11 PM
Transitioning from semi-retirement to retirement? RDamien FIRE and Money 0 06-17-2008 02:01 PM
Paritioned portfolios of Target Retirement 20XX for each decade of retirement chinaco FIRE and Money 11 03-15-2007 06:06 PM
Retirement Accounts and Early Retirement heebygeeby Young Dreamers 9 03-14-2007 04:56 PM
Duration of retirement and size of retirement fund Cool Dood FIRE and Money 9 06-28-2006 09:34 AM

 

 
All times are GMT -6. The time now is 09:05 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.