View Poll Results: Would you take a lump sum buy out instead of monthly Social Security?
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Yes
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20 |
21.98% |
No
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71 |
78.02% |
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If you could would you take a lump sum buy out from SS?
09-17-2015, 10:39 PM
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#1
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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If you could would you take a lump sum buy out from SS?
I'm interested in people's attitude to risk and "guaranteed" income in retirement. So it occurred to me to ask whether you would take a lump sum in place of SS assuming current IRS segmented interest rates and COLA?
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”
Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
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09-17-2015, 10:51 PM
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#2
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Thinks s/he gets paid by the post
Join Date: Aug 2004
Location: St. Louis
Posts: 2,179
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Quote:
Originally Posted by nun
I'm interested in people's attitude to risk and "guaranteed" income in retirement. So it occurred to me to ask whether you would take a lump sum in place of SS assuming current IRS segmented interest rates and COLA?
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I believe in diversification. If I didn't have any SS or a pension, I would strongly consider buying a SPIA with perhaps 20% or so of my portfolio, pending more details when I get up to my 60s (over 20 years away).
So if SS offered me to rollover over my balance, even if it were truly actuarial neutral, I'd probably opt to keep it to help offer some stabilization to the portfolio withdrawals.
__________________
Dryer sheets Schmyer sheets
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09-18-2015, 12:00 AM
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#3
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Full time employment: Posting here.
Join Date: Apr 2015
Posts: 903
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Did the math. IRS segmented rates work out to 6% initial WR for age 67 with 20 years life expectancy (19.4 based on RMD Table I: Single Life Expectancy for Beneficiaries). SPIA from immediateannuities is 7% cashflow rate (Single Life, Male, 67) but no COLA which is my primary gripe with SPIA. As far as annuities go, SS is pretty inexpensive so I'd rather get the monthly checks than go lump sum for the income diversification.
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09-18-2015, 04:23 AM
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#4
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Recycles dryer sheets
Join Date: Jun 2010
Location: Southwest Florida
Posts: 470
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Can't really answer without knowing the lump sum and the health of the person involved.
Bruce
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09-18-2015, 05:44 AM
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#5
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Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,585
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No.
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09-18-2015, 06:03 AM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2006
Location: Washington, DC
Posts: 11,317
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Quote:
Originally Posted by MooreBonds
I believe in diversification. If I didn't have any SS or a pension, I would strongly consider buying a SPIA with perhaps 20% or so of my portfolio, pending more details when I get up to my 60s (over 20 years away).
So if SS offered me to rollover over my balance, even if it were truly actuarial neutral, I'd probably opt to keep it to help offer some stabilization to the portfolio withdrawals.
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+1 I think this is why people get so alarmed at proposals to weaken or do away with SS and Medicare. Everyone knows we pay a lot for these programs but having a guaranteed source of income and medical care for old age is a huge deal. And despite all the ballyhoo about the deficit I suspect most of us still trust the US Government to guarantee those benefits better than self funded sources.
__________________
Idleness is fatal only to the mediocre -- Albert Camus
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09-18-2015, 06:20 AM
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#7
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Full time employment: Posting here.
Join Date: May 2015
Location: Atlanta suburbs
Posts: 633
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NO
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09-18-2015, 06:21 AM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2007
Posts: 14,328
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Quote:
Originally Posted by donheff
+1 I think this is why people get so alarmed at proposals to weaken or do away with SS and Medicare. Everyone knows we pay a lot for these programs but having a guaranteed source of income and medical care for old age is a huge deal. And despite all the ballyhoo about the deficit I suspect most of us still trust the US Government to guarantee those benefits better than self funded sources.
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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.
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09-18-2015, 06:47 AM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2008
Location: NC
Posts: 21,204
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Everyone should have some retirement floor income IMO, how much can be legitimated debated (ours is already pretty low, see sig line).
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.
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+1. Like insurance, it doesn't really work if we're not all in. That alone is reason enough to not allow a SS lump sum option for anyone.
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57
Target AA: 50% equity funds / 45% bonds / 5% cash
Target WR: Approx 1.5% Approx 20% SI (secure income, SS only)
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09-18-2015, 06:58 AM
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#10
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Moderator
Join Date: Apr 2012
Location: San Diego
Posts: 14,169
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I'm a fan of the 3 legged stool. One of those legs is SS with it's nice COLA. I have a very small non-cola pension that I wish was bigger - that's another leg. And my third leg is my savings and rental income.
I would consider purchasing a SPIA to beef up the pension leg - if we weren't in this zero interest environment making them super expensive. No way in heck I'd give up the security and COLA factor of SS.
__________________
Retired June 2014. No longer an enginerd - now I'm just a nerd.
micro pensions 6%, rental income 20%
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09-18-2015, 07:16 AM
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#11
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2013
Location: Texas
Posts: 10,863
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I'd consider it but I would need to see the details first. But as someone else said, what happens when some folks blow their money and come back for help. Are "we" going to have to pay for them as charity cases.
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09-18-2015, 07:17 AM
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#12
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Posts: 3,054
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No.
Would change to "Yes" if I thought they were going to cut the benefit in the future.
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09-18-2015, 07:19 AM
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#13
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Thinks s/he gets paid by the post
Join Date: Jul 2013
Posts: 1,879
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Without doing the math, I think I'd answer "yes", but only because I'll be retiring early, and I think I could put that money to good use for the next 15 years.
If I was closer to FRA, I'd say "no".
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09-18-2015, 07:21 AM
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#14
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Thinks s/he gets paid by the post
Join Date: Nov 2006
Posts: 2,288
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Quote:
Originally Posted by jim584672
No.
Would change to "Yes" if I thought they were going to cut the benefit in the future.
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Thats the obvious reason why anyone would vote Yes. So if you voted No I assume you dont believe they will cut the benefit in the future? I voted Yes because I do believe it will happen at some point. I guess if I was already 65 I would vote No because the most obvious change is to raise the age to begin collecting
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09-18-2015, 07:43 AM
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#15
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Thinks s/he gets paid by the post
Join Date: Jul 2002
Posts: 1,581
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Nope, for the same reason some would consider purchasing an annuity......an income stream that you hope you never outlive.
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09-18-2015, 08:01 AM
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#16
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Posts: 17,203
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No...
The lump sum would not take into account spousal benefits and to me that is HUGE...
In fact, if you take my life expectancy and DWs.... she will earn more from my SS than I will...
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09-18-2015, 08:10 AM
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#17
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Thinks s/he gets paid by the post
Join Date: Aug 2014
Location: Chicago West Burbs
Posts: 2,998
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NO! here too. I haven't even heard this talked about since ~2009. Before then, there was a lot of talk about eliminating SS all together and letting individuals handle their own retirement plans. Since that "correction" in the markets, I haven't heard much talk about this since. 3 legged stool is a great balance.
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09-18-2015, 08:26 AM
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#18
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Thinks s/he gets paid by the post
Join Date: Oct 2006
Posts: 4,629
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How can anybody answer that without knowing the size of the lump sum?
I'm currently deferring SS, so I'm actually buying a little more of their CPI adjusted life annuity each month. At the current "lump sum vs. annuity" trade-off, I think SS is a good deal.
A complete buyout might come at a different price.
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09-18-2015, 08:46 AM
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#19
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Posts: 17,203
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Quote:
Originally Posted by Independent
How can anybody answer that without knowing the size of the lump sum?
I'm currently deferring SS, so I'm actually buying a little more of their CPI adjusted life annuity each month. At the current "lump sum vs. annuity" trade-off, I think SS is a good deal.
A complete buyout might come at a different price.
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Yes, this is the important part of the question for us... we have already paid into the system for years... if the question was, your are starting your career... do you want your money to go into SS or a different system where you control the money? I would answer it differently....
Or if the question was.... you can get a lump some based on your contributions and market earnings (not just bonds) or your regular SS payments?, it might be a different answer....
But since it is a lump sum based off of the current SS payment, the amounts should be neutral to a single person...
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09-18-2015, 08:54 AM
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#20
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gone traveling
Join Date: Jun 2015
Location: seattle/dahlonega
Posts: 77
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yes
pay me back everything I contributed with interest
we'll call it even
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