Join Early Retirement Today
View Poll Results: Would you take a lump sum buy out instead of monthly Social Security?
Yes 20 21.98%
No 71 78.02%
Voters: 91. You may not vote on this poll

Reply
 
Thread Tools Search this Thread Display Modes
If you could would you take a lump sum buy out from SS?
Old 09-17-2015, 11:39 PM   #1
Thinks s/he gets paid by the post
nun's Avatar
 
Join Date: Feb 2006
Posts: 4,836
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: 65% Equity Funds / 20% Bonds / 7% Stable Value /3% Cash / 5% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
nun 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 09-17-2015, 11:51 PM   #2
Thinks s/he gets paid by the post
MooreBonds's Avatar
 
Join Date: Aug 2004
Location: St. Louis
Posts: 2,091
Quote:
Originally Posted by nun View Post
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?
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
MooreBonds is offline   Reply With Quote
Old 09-18-2015, 01:00 AM   #3
Full time employment: Posting here.
 
Join Date: Apr 2015
Posts: 903
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.
__________________
hnzw_rui is offline   Reply With Quote
Old 09-18-2015, 05:23 AM   #4
Recycles dryer sheets
 
Join Date: Jun 2010
Location: Southwest Florida
Posts: 326
Can't really answer without knowing the lump sum and the health of the person involved.
Bruce
__________________
Gill is offline   Reply With Quote
Old 09-18-2015, 06:44 AM   #5
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,477
No.
__________________
MichaelB is online now   Reply With Quote
Old 09-18-2015, 07:03 AM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 8,645
Quote:
Originally Posted by MooreBonds View Post
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.
+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.
__________________
Every man is, or hopes to be, an Idler. -- Samuel Johnson
donheff is offline   Reply With Quote
Old 09-18-2015, 07:20 AM   #7
Recycles dryer sheets
 
Join Date: May 2015
Location: Atlanta suburbs
Posts: 351
NO
__________________
DEC-1982 is offline   Reply With Quote
Old 09-18-2015, 07:21 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 9,896
Quote:
Originally Posted by donheff View Post
+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.
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.
__________________
Yes, I have achieved work / life balance.
travelover is offline   Reply With Quote
Old 09-18-2015, 07:47 AM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 11,977
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 View Post
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. 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: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is online now   Reply With Quote
Old 09-18-2015, 07:58 AM   #10
Moderator
rodi's Avatar
 
Join Date: Apr 2012
Location: San Diego
Posts: 8,817
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 7%, rental income 18%
rodi is offline   Reply With Quote
Old 09-18-2015, 08:16 AM   #11
Thinks s/he gets paid by the post
Car-Guy's Avatar
 
Join Date: Aug 2013
Location: Citizen of Texas
Posts: 2,483
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.
__________________
Car-Guy is online now   Reply With Quote
Old 09-18-2015, 08:17 AM   #12
Thinks s/he gets paid by the post
 
Join Date: Feb 2014
Posts: 1,050
No.

Would change to "Yes" if I thought they were going to cut the benefit in the future.
__________________
jim584672 is offline   Reply With Quote
Old 09-18-2015, 08:19 AM   #13
Recycles dryer sheets
 
Join Date: Jul 2013
Posts: 388
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".
__________________
mrfeh is offline   Reply With Quote
Old 09-18-2015, 08:21 AM   #14
Thinks s/he gets paid by the post
 
Join Date: Nov 2006
Posts: 2,268
Quote:
Originally Posted by jim584672 View Post
No.

Would change to "Yes" if I thought they were going to cut the benefit in the future.
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
__________________
utrecht is offline   Reply With Quote
Old 09-18-2015, 08:43 AM   #15
Thinks s/he gets paid by the post
 
Join Date: Jul 2002
Posts: 1,040
Nope, for the same reason some would consider purchasing an annuity......an income stream that you hope you never outlive.
__________________
RE2Boys is offline   Reply With Quote
Old 09-18-2015, 09:01 AM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,283
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...
__________________
Texas Proud is offline   Reply With Quote
Old 09-18-2015, 09:10 AM   #17
Recycles dryer sheets
 
Join Date: Aug 2014
Posts: 429
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.
__________________
CRLLS is online now   Reply With Quote
Old 09-18-2015, 09:26 AM   #18
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,820
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.
__________________
Independent is offline   Reply With Quote
Old 09-18-2015, 09:46 AM   #19
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,283
Quote:
Originally Posted by Independent View Post
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.

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...
__________________
Texas Proud is offline   Reply With Quote
Old 09-18-2015, 09:54 AM   #20
gone traveling
 
Join Date: Jun 2015
Location: seattle/dahlonega
Posts: 77
yes


pay me back everything I contributed with interest


we'll call it even
__________________

__________________
hurricane harry 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
Take Lump Sum and accept new job offer? PnJL Hi, I am... 7 07-06-2011 06:55 PM
When would you get in the market with a lump sum? amy5708 Stock Picking and Market Strategy 69 02-24-2008 09:30 AM
Lump sum to invest, DCA in or go lump? Olav23 FIRE and Money 4 03-03-2007 04:22 PM
Take a lump sum or pension payout Rollie FIRE and Money 45 06-11-2006 07:54 PM

 

 
All times are GMT -6. The time now is 10:56 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.