Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Which DB Pension Option would you choose and Why?
Old 08-29-2013, 06:21 PM   #1
Recycles dryer sheets
sheldon cornped's Avatar
Join Date: Mar 2011
Posts: 71
Which DB Pension Option would you choose and Why?

Here are the Pension #'s I pulled from my MegaCorp projected income on our benefits website. This is a non-COLA'd pension with multiple options that are too numerous to mention here. I will be 60 in 01/2014. The annuity increases at 4% for each yr. thereafter.

Option 1
Single life annuity $4470/mo
100% pop-up 3862/mo (I would choose this since wife would
receive this amount should I pass 1st
and it would pop-up to the $4470
should she predecease me)
Option 2
Lump Sum split option $528,085 plus $1185/mo Joint&/Survivor

My question to you is which option would you select and why? We have investments/cash just over $1MM. DW gets teachers ret. in 4 years of about 1850/mo. SS at 62 for me would be about 2000/mo. I would be inclined to choose the annuity w/ pop-up. Do you think I could do better investing the lump long term while getting 1185 annuity with it? Interested to hear how you seasoned, sound judgement experts would weigh in.

sheldon cornped 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 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 08-31-2013, 12:00 AM   #2
Full time employment: Posting here.
Join Date: Jun 2006
Posts: 926
Of just those two I would choose option 1. You might want to instead consider the full single life annuity without the pop-up option if you could find life insurance at a better rate than the roughly 600 a month the pop-up option would cost you. What about SS for your DW the retiring teacher? I am thinking perhaps not so that she would definitely need either the pop-up option or some life insurance to cover it. BTW, congratulations you seem to be in great shape for early retirement unless your expenses are too high.

CW4, USA-(ret)
RN, BSN-(ret)
jclarksnakes is offline   Reply With Quote
Old 08-31-2013, 04:41 AM   #3
Recycles dryer sheets
Join Date: Sep 2006
Location: clearwater
Posts: 208
Of just those two I would choose option 1
You seem to have a large enough nest egg. Other issues would be how much you spend, does the pension have a COLA? does the wife also get SS?
rothlev is offline   Reply With Quote
Old 08-31-2013, 07:56 AM   #4
Moderator Emeritus
Bestwifeever's Avatar
Join Date: Sep 2007
Posts: 15,365
It depends on your expenses imho and if you want to leave $$ in an estate and if each of you would receive any of the other's SS or teacher's retirement.

The pop-up that comes with the lump sum is a nice little benefit.

I don't think you could go wrong with either option.
Go Cubs
Bestwifeever is offline   Reply With Quote
Old 08-31-2013, 09:07 AM   #5
MichaelB's Avatar
Join Date: Jan 2008
Location: On the road again
Posts: 21,121
Option 2 is more flexible and diversified, with similar income potential coming from pension and portfolio. If some part of it is in taxable accounts, it could be more tax efficient option. Option 1 is more predictable, because of the large component of pension income. If this were my situation, my questions would be how easily would my surviving spouse deal with each and does either option have a substantially greater risk of running out of money.
MichaelB is offline   Reply With Quote

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


All times are GMT -6. The time now is 02:28 PM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2016, vBulletin Solutions, Inc.