stephenson
Thinks s/he gets paid by the post
- Joined
- Jul 3, 2009
- Messages
- 1,612
OK, so not much of a twist, but I really do need some advice for consideration.
My megacorp got gobbled by a bigger megacorp about 10 years ago (I had 10 years at the time)... the original megacorp had a pension plan with lump sum option, but the larger megacorp does not - only the original megacorp time is eligible for lump sum.
During the transition period of five years, there was a "higher of the two" pension plan (the higher is almost always the plan from the original megacorp) component, followed by a "Cash Basis" plan component with the now fully consumed megamegacorp.
Net - I have a Part A (lump sum or annuity), a higher of Part B or C (annuity only), and a Part D (annuity only) as components to my package.
I have read hundreds of the interchanges between e-r.org followers ... all very thoughtful and helpful.
The question is usually - "Is it better to take the pension or buy an annuity with the lump sum?" What I usually hear is something like, "Yes, the pension is better because the employer gets a better rate than an individual buying an annuity."
In my case an annuity that continues to pay my spouse when I auger in, is about $2150/month. The megacorp pension Part A component (either the lump sum or monthly payment) is about $2460/month. Enough of a difference to warrant taking the pension IF i was comparing apples to apples.
I've run FIRECALC and the Fidelity tool several times, playing with numbers ...once I got over the concept of being on the down side of the curve, I will probably have about the same useable income post work as I did when working - factors include not saving via 401K, not saving in addition to 401K, not having house payment (at the same level since we will move to less expensive area), kids gone, etc. (I have a military retirement from 20 years, early IRA before I earned out, real estate, taxable savings, etc)
So, it occurred to me that it might make sense, given our circumstances, to take the lump sum and roll it into a tax deferred construct, manage it more aggressively, etc ...obviously, there is additional risk vs pension or annuity ... but, if I can weather the ups and downs of various components inside the tax advantaged construct (equity and bond markets), wouldn't taking the lump sum and managing it effectively make sense?
Would appreciate comments and criticism
Thanks!!
My megacorp got gobbled by a bigger megacorp about 10 years ago (I had 10 years at the time)... the original megacorp had a pension plan with lump sum option, but the larger megacorp does not - only the original megacorp time is eligible for lump sum.
During the transition period of five years, there was a "higher of the two" pension plan (the higher is almost always the plan from the original megacorp) component, followed by a "Cash Basis" plan component with the now fully consumed megamegacorp.
Net - I have a Part A (lump sum or annuity), a higher of Part B or C (annuity only), and a Part D (annuity only) as components to my package.
I have read hundreds of the interchanges between e-r.org followers ... all very thoughtful and helpful.
The question is usually - "Is it better to take the pension or buy an annuity with the lump sum?" What I usually hear is something like, "Yes, the pension is better because the employer gets a better rate than an individual buying an annuity."
In my case an annuity that continues to pay my spouse when I auger in, is about $2150/month. The megacorp pension Part A component (either the lump sum or monthly payment) is about $2460/month. Enough of a difference to warrant taking the pension IF i was comparing apples to apples.
I've run FIRECALC and the Fidelity tool several times, playing with numbers ...once I got over the concept of being on the down side of the curve, I will probably have about the same useable income post work as I did when working - factors include not saving via 401K, not saving in addition to 401K, not having house payment (at the same level since we will move to less expensive area), kids gone, etc. (I have a military retirement from 20 years, early IRA before I earned out, real estate, taxable savings, etc)
So, it occurred to me that it might make sense, given our circumstances, to take the lump sum and roll it into a tax deferred construct, manage it more aggressively, etc ...obviously, there is additional risk vs pension or annuity ... but, if I can weather the ups and downs of various components inside the tax advantaged construct (equity and bond markets), wouldn't taking the lump sum and managing it effectively make sense?
Would appreciate comments and criticism
Thanks!!