pompanobeach
Recycles dryer sheets
- Joined
- Jun 4, 2018
- Messages
- 79
I agree. Roll it over into a Roth IRA. In 30 years you will not have to pay taxes on any of the money!
Would you take guaranteed 6.5% returns for 30 years (pension buyout)
- Thread starter zesty
- Start date
rk911
Thinks s/he gets paid by the post
and your heirs can inherit when you pass.
almost there
Thinks s/he gets paid by the post
- Joined
- Sep 24, 2008
- Messages
- 1,012
Depends on what else you have lined up.
I took $1520 a month for life @ 55 rather than 280k cash. Annuity or cash balance. (my 2 options) Made a lot of sense 3 yrs ago when rates were 1.5%
With taxes etc. it worked out better for me. And at about the same 6.5% you are looking at.
Its a sliver of my retirement. But should get 30 yrs out of it anyway.
Anything over 19 yrs is gravy. Based on a 3% return it would peter out in 19 yrs.
So far so good. Have pulled about $55k out of it so far. So no complaints...
I took $1520 a month for life @ 55 rather than 280k cash. Annuity or cash balance. (my 2 options) Made a lot of sense 3 yrs ago when rates were 1.5%
With taxes etc. it worked out better for me. And at about the same 6.5% you are looking at.
Its a sliver of my retirement. But should get 30 yrs out of it anyway.
Anything over 19 yrs is gravy. Based on a 3% return it would peter out in 19 yrs.
So far so good. Have pulled about $55k out of it so far. So no complaints...
Last edited:
6.5% Guaranteed yield?
In this age with low inflation, a 6.5% yield is very high. The current yield on investment grade industrial bonds is 3.3%
$375/m may seem low, but 14,000 $ isn't a lot either. I am living in Europe and part of my retirement is a quilt of state pensions from various countries where I have worked. Each one seems modest since I have worked 4-5 years in each country, but when I add them up, they contribute nicely. After all, the big picture is the sum of small pictures, so if you optimize each bit, it makes a difference.
Neglecting tax effects, 14k $, compounded over 30 years at 6.5% should give a capital of $ 92.600 in 30 years. If they continue to get a 6.5% yield, the annual yield will be higher than 4500, so the capital will continue to grow. But assuming a 20 year life expectancy, you would pull 90,000 out. They would hold a capital over, but if they really managed to get a 6.5% yield over 50 years, I think they have deserved it.
Have a look at the yield of your IRA. And run the calcs using that yield. If I use 4%, the capital will grow to $ 45,400. And once you start drawing your 4500, after 14 years, the capital will have been consumed, still assuming 4% after you retire.
If you can find a tame retirement/investment advisor, it might be an idea to bounce the question of him/her.
In this age with low inflation, a 6.5% yield is very high. The current yield on investment grade industrial bonds is 3.3%
$375/m may seem low, but 14,000 $ isn't a lot either. I am living in Europe and part of my retirement is a quilt of state pensions from various countries where I have worked. Each one seems modest since I have worked 4-5 years in each country, but when I add them up, they contribute nicely. After all, the big picture is the sum of small pictures, so if you optimize each bit, it makes a difference.
Neglecting tax effects, 14k $, compounded over 30 years at 6.5% should give a capital of $ 92.600 in 30 years. If they continue to get a 6.5% yield, the annual yield will be higher than 4500, so the capital will continue to grow. But assuming a 20 year life expectancy, you would pull 90,000 out. They would hold a capital over, but if they really managed to get a 6.5% yield over 50 years, I think they have deserved it.
Have a look at the yield of your IRA. And run the calcs using that yield. If I use 4%, the capital will grow to $ 45,400. And once you start drawing your 4500, after 14 years, the capital will have been consumed, still assuming 4% after you retire.
If you can find a tame retirement/investment advisor, it might be an idea to bounce the question of him/her.
I've rolled several small sums like this, just for simplicity, including one pension.
Also, I don't see any mention of pension risk. Many pension systems have always been overpromised and underfunded. Exactly the kind of risk I don't want to take, since almost all my former employers are gone.
Also, I don't see any mention of pension risk. Many pension systems have always been overpromised and underfunded. Exactly the kind of risk I don't want to take, since almost all my former employers are gone.
