I will turn 65 in August 2017. At that time I will be getting a modest pension. But I just got an offer to start collecting that pension effective November 1 of this year. (they also offered a lump sum buyout but I'm not interested in that).
Any actuaries out there that can help me? I can provide the specific numbers. I'm presuming, for purposes of the pension, that I'll last until age 82, and DW until 96 (she'd get 3/4 survivor benefit).
Disclosure: NOT AN ACTUARY
To get a ballpark feel for this try the following approach.
From what I recall for your age a 6-7% reduction for a one year earlier draw is actuarial fair. You are talking about potentially a ~ 3/4 of a year earlier draw so the fair discount would be in this range: 4.5% - 5.25%.
To compute the discount that the employer is offering, use the following formula:
.............pmt (Nov 1 2016 start)
100* (1- ---------------------- )
.............pmt (Aug 1 2017 start)
(ignore the dots above. I needed to add them because spaces were being ignored by the ER forum software)
If it is significantly outside the 4.5% - 5.25% range then you can get a feel if the early offer is a subsidy to you or a penalty.
All this assumes that you will have an average lifespan which may not be the case (I suspect that most of those who post here and are healthy will have longer life spans than average).
-gauss
p.s. You may find the actuarial calculators available at
this site interesting
