Would you take a lump sum buy out from SS?

[Texas Proud]

Quote:

Originally Posted by nun Yes the survivor benefits make SS attractive, but if the lump sum took COLA and survivor benefit into consideration making it even larger would you take the lump sum? I asked a related question a while back where I asked at what IRR people would buy an annuity. Very few people would buy one even with IRRs above 8%. So it looks like people won't buy fixed income streams with lump sums, but also like to keep a fixed income stream when they already have one.

I would take the lump sum if they took into account both me and wife... which includes spouse and survivor benefits.... the calculators show she will get more money than I will.... and with interest rates low that means a bigger lump sum... OH, and it needs to take into account COL increases... but yea, if it took into account all that I would take the lump sum...

[hurricane harry]

Quote:

Originally Posted by Independent Since your taxes were used to pay old people's benefits, we'd have to go back and get those people or their heirs to repay their benefits. Of course, if some of those old people happen to be your parents or grandparents, maybe the "heirs" part above would make it a wash for you.

people take pensions in lump sums

old pensioners do not pay for that

[Animorph]

Quote:

Originally Posted by hurricane harry people take pensions in lump sums old pensioners do not pay for that

For quite a while DW's pension plan was considered underfunded and was not allowed to offer lump sums. It would be possible to totally drain a pension fund if everyone wanted a lump sum. Those remaining in the plan would be screwed.

[kimcdougc]

Yes, I would take the lump sum. I know what we paid in our ss balance. I would rather be in control of my money than our government. Remember SS is suppose to go bankrupt in the near future or only pay out 2/3rds of what they should. Just my 2 cents.

[NW-Bound]

Quote:

Originally Posted by Texas Proud I do not just want interest.... I want a balanced portfolio return!!!

Would you like Wellesley's or Wellington's return, sir? I would take pure S&P 500, thank you.

Oh yeah, one can dream.

[eytonxav]

Not for me. When I retired from mega-corp, I took my pension as a lump sum instead of an annuity payout, and don't really need to increase that amount further.

[jimbee]

Quote:

Originally Posted by DROPOUT Yes ~ Because I don't think I'll end up seeing it 35+ years from now

I thought the same thing 35 years ago.

[Independent]

Quote:

Originally Posted by hurricane harry people take pensions in lump sums old pensioners do not pay for that

In most cases, private pensions are advance funded. The pension plan simply sells stocks and bonds to raise the money for the lump sums.

SS is paygo.

[Fermion]

If they pay back the full contribution (from employee AND employer) along with a compounded 8% interest for the past 26 years, then yeah, maybe would take the lump sum.

I don't see them handing out million dollar checks like this though.

[hurricane harry]

Quote:

Originally Posted by Independent In most cases, private pensions are advance funded. The pension plan simply sells stocks and bonds to raise the money for the lump sums. SS is paygo.

so you think pensions only invest in stocks and bonds? better check your facts

SS is a pay as you go because those funds where raided by politicians, more reason to take the money we are owed

[Midpack]

Fascinating the proposals to be 'paid back' overly generous lump sums, knowing the "contributions" were spent when they were made (long ago), and the payouts would be coming from fellow taxpayers, our kids/grandkids mostly. Funny sense of humor if that's what it's meant to be?

[Fermion]

Quote:

Originally Posted by Midpack Fascinating the proposals to be 'paid back' overly generous lump sums, knowing the "contributions" were spent when they were made (long ago), and the payouts would be coming from fellow taxpayers, our kids/grandkids mostly. Funny sense of humor if that's what it's meant to be?

I wonder if some find the same humor in underfunded government pension funds wanting payouts from present taxpayers for contributions that should have been made by taxpayers long gone. :-)

[MichaelB]

The original topic is interesting, hopefully the discussion will get back on track...

[marko]

Would depend on the size of the lump sum. $3M? Sure! $500K? No.

OTOH, with talk of us "rich" folk being dropped from the SS rolls, "bird in hand" might apply some day.

[Fermion]

I don't think it has gotten off track if you view SS as just another form of government pension.

These threads always seem to cast doubt on the sustainability of SS while we have military, state and federal pensions which should fall under the same doubt.

I guess we could have a separate thread for "Would you take a lump sum buyout of your military pension" or "Would you take a lump sum buyout of your federal pension" and then make statements on how that money would come from our children and grandchildren.

[Independent]

Quote:

Originally Posted by hurricane harry so you think pensions only invest in stocks and bonds? better check your facts SS is a pay as you go because those funds where raided by politicians, more reason to take the money we are owed

According to this report on 100 big plans, 43% bonds, 37% equities, 20% "other" (including "real estate, private equity, hedge funds, commodities, and cash equivalents.")Corporate Pension Funding Study - Milliman - United States

But, the asset allocation wasn't the point. Most private plans are expected to be advance funded. If the sponsor decides to offer a lump sum option, the sponsor can usually get the money from selling assets.

SS is paygo. Almost all taxes collected were used to pay benefits in the same year that the taxes were paid. (Yes, I know about the Trust Fund, but it is small relative to an accumulation of all taxes.) Any decision to offer lump sums would need to get cash from somewhere.

Since the money was primarily spent on benefits to prior generations, my tongue-in-cheek suggestion was to get it back from them. My more serious comment was that we need to recognize that, for many of us, our current financial position is better due to the SS benefit our parents or grandparents received.

[hnzw_rui]

Quote:

Originally Posted by Fermion I guess we could have a separate thread for "Would you take a lump sum buyout of your military pension" or "Would you take a lump sum buyout of your federal pension" and then make statements on how that money would come from our children and grandchildren.

Nah. Lump-sum from our local gov't pension only gives a return of employee contributions plus very small interest based on Treasuries. That would be depleted in something like 5 years if using the annuity payout rate. You don't get any employer contributions or even the pension trust fund returns.

[Debbyalee]

Would stick with monthly SS payments. Never put all your eggs in one basket and it is always good to have multiple streams of income.


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[bclover]

Quote:

Originally Posted by travelover And what to do with those that would take a lump sum, blow it and then come back as destitute? SS was never meant to be a retirement income, just a safety net.

+1

[Texas Proud]

Quote:

Originally Posted by Midpack Fascinating the proposals to be 'paid back' overly generous lump sums, knowing the "contributions" were spent when they were made (long ago), and the payouts would be coming from fellow taxpayers, our kids/grandkids mostly. Funny sense of humor if that's what it's meant to be?

Lighten up.... it is a hypothetical question that has zero chance of happening....


But, everybody who is getting a SS check is getting it from "fellow taxpayers, our kids/grandkids".... so what is the difference