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Still struggling with my retirement plan
Old 08-28-2013, 05:56 PM   #1
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Join Date: Mar 2013
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Still struggling with my retirement plan

My position was eliminated in April and I知 still working on my plan to stay retired. Below are the 2 plans I知 currently working with. The major difference in the plans is the delaying of my non-cola pension for 2 years. For some reason I feel better about option 1 because it seems to have less risk because I値l be spreading out the severance until SS kicks in.

Would I be better off delaying the pension for 2 years for the additional $5,000 per year? Also if I die before I take the pension my wife would only get $15,000 per year.

Do you think option 1 would be fine or should I take a serious look at option 2? Option 2 includes very little reportable income for 2 years so I would need to sell some investments to generate enough income to qualify for Obamacare.

Any recommendations would be greatly appreciated.

Below is my current status.

$16,000 from severance in checking for expenses from Sep 2013 Dec 2013.
$96,000 from severance in the bank.
$400,000 90% stocks 10% bonds. 50% Taxable.
$75,000 in CD痴

I have a small online business that should generate $5,000 per year after expenses but before taxes. If the business does not generate the $5,000 I値l take if from the investments.

My expenses should be around $45,000 per year and increase by around 2.5% per year.

Option #1
From Jan 2014 until Sept 2021.
$30,000 per (Joint and Survivor) non-COLA pension starting 1/1/2014.
$15,000 per year from severance fund.
$5,000 per year from small business.

$21,000 one time from investments.

Total = $50,000 annually until 2021

Starting in 2021 I値l turn 66 and my SS will be $27,000 and my wife will get $13,000. The severance money will be gone and I知 not counting on the small business income.
Total income starting in 2021 = $70,000 without any investment income.

Option #2 - Delay pension until Jan 2016.

From Jan 2014 until Jan 2016
$45,000 per year from the severance account.
$5,000 from small business
Total $50,000

From 2016 2021
$35,000 (Joint and Survivor) non-COLA pension starting 1/1/2016.
$10,000 per year from investment account
$5,000 from small business.
Total $50,000

Starting in 2021 I値l turn 66 and my SS will be $27,000 and my wife will get $13,000.
Starting in 2021
$35,000 non-COLA pension
$40,000 SS including spouse

Total = $75,000 annually without any investment income.

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Old 08-28-2013, 09:27 PM   #2
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Location: Vermont & Sarasota, FL
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So if you decide Option 2 and something happens before you start your pension your DW would end up with $42k/year ($15k from your non-COLA pension + your $27k SS). Could she live on that amount?

If you decide Option 1 and something happens to you she gets $57k ($30k from your non-COLA pension + your $27k SS).

Another twist. Option 2 but take out a ~$250k ten year life insurance policy out on you now. If you live to age 66 you follow option 2 and reap the benefits. If you don't then the $250k of death benefits can be used by your DW to buy a SPIA paying ~$15k a year. Might not work if the life insurance is too expensive but something to think about.

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Old 08-28-2013, 10:15 PM   #3
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Join Date: Jul 2009
Posts: 3,131
I would probably be inclined to do Option 1 just for spousal protection, although the option of a life insurance policy to cover that risk might work.

You say spouse will get $13000 and you get $27000. A spouse will usually get the higher of own SS or enough from spouse to get up to half of spouse. So it would seem that the minimum she might get would half of yours which would be $13500 if you get $27000.
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