Just got a package in the mail the other day about a a pension my wife has with a former employer. Her account didn't accrue much value during her time there, and as it is below a certain limit we are allowed to distribute the pension as a lump sum now, or as an annuity starting now (which I believe I'm not interested in), or leave it as is to be eventually claimed at 65. I had received similar info in the past as I wanted to roll this stuff into other existing retirement accounts just to consolidate but we never moved on it because like today I wasn't able to evaluate the options then. I don't know what prompted them to send us this package, but my first inclination is to think that the payout is a better deal for them than for me if they are promoting it, but I don't know.
Ive tried using online calculators for pension payouts or annuity payouts, but 1) I'm not familiar with these products and 2) it seems like most of the calculators assume you are comparing cashing out today vs taking pension payments today, rather than cashing out today vs taking payments 30 years from now.
Details are as follows:
If the lump-sum is a slightly worse deal, I may still be inclined to take it just to consolidate resources so I don't forget about this pension and never claim it, and so we don't have to worry about the pension fund collapsing one day. The company in question is not going to cease to exist in the next 30 years, don't know if that's really relevant or not.
Will that payout amount change based on market conditions? I was thinking maybe if so I leave it as is until the next market crash, and then distribute when valuations are lower to be invested then. I guess that's the same as timing the market to buy equities from cash, but wasn't sure if the pension account grows at all while I'm waiting or what.
Clearly I really don't know what I'm dealing with here, any info, opinions, or resources to point me to are appreciated.
Ive tried using online calculators for pension payouts or annuity payouts, but 1) I'm not familiar with these products and 2) it seems like most of the calculators assume you are comparing cashing out today vs taking pension payments today, rather than cashing out today vs taking payments 30 years from now.
Details are as follows:
- pension benefit starting at age 65 is 313.83 per month, for the rest of her life
- Lump sum payout today is 11,941.86
- DW's current age is 35
- They list this 11,942 lump sum payout as having a 121% value compared to the single life annuity option (which I believe I'm not interested in - the payments are only $40/mo and I don't want to start taking retirement benefits now)
- no info on inflation adjustments or cost of living adjustments
- no info on any percent rate the pension is 'earning' over the next 30 years
If the lump-sum is a slightly worse deal, I may still be inclined to take it just to consolidate resources so I don't forget about this pension and never claim it, and so we don't have to worry about the pension fund collapsing one day. The company in question is not going to cease to exist in the next 30 years, don't know if that's really relevant or not.
Will that payout amount change based on market conditions? I was thinking maybe if so I leave it as is until the next market crash, and then distribute when valuations are lower to be invested then. I guess that's the same as timing the market to buy equities from cash, but wasn't sure if the pension account grows at all while I'm waiting or what.
Clearly I really don't know what I'm dealing with here, any info, opinions, or resources to point me to are appreciated.