I am facing a pension decision and looking for opinions. My choices will be to take a Lump sum, COLA(cpi based) or Non-COLA annuity, or combination. I am leaning toward taking 60% in a Lump and 40% in a COLA annuity.
The Lump would be rolled into my 401k and that total amount used to fund a 4% withdrawal rate. The 4% withdrawal added to the COLA annuity would hit my targeted minimum income. I would like to work part-time until SS kicks in, hopefully at 70 since I am 55 now. Then I could take a raise, or cut back on withdrawals in order to leave some behind. If circumstances changed, I could always take SS earlier. I have a decent deal on health insurance that should continue until 65.
This seems to be a pretty conservative way to go. Maybe it is too conservative. Would I be better off taking a different percentage in a Non-Cola annuity? Using a "normal" lifespan seems to favor a non-COLA. I would have more to invest in the market under the non-COLA plan.
I have pretty much ruled out 100% Lump or 100% annuity. My 401k allocation is a 60/40 Boglehead type portfolio.The annuity rates are pretty close to 5% of amount for COLA and 7% for Non-COLA. This seems o be a little better than immediateannuities.com. It is a pretty solid pension plan although anything can happen.
I want to play it pretty safe, but hopefully not way overboard. I just want to find a balance with a high level of certainty for baseline expenses and a good chance of having a little extra.
I hope I have enough details here to start a discussion. If not, I can fill in the holes. Thank you for your time!
The Lump would be rolled into my 401k and that total amount used to fund a 4% withdrawal rate. The 4% withdrawal added to the COLA annuity would hit my targeted minimum income. I would like to work part-time until SS kicks in, hopefully at 70 since I am 55 now. Then I could take a raise, or cut back on withdrawals in order to leave some behind. If circumstances changed, I could always take SS earlier. I have a decent deal on health insurance that should continue until 65.
This seems to be a pretty conservative way to go. Maybe it is too conservative. Would I be better off taking a different percentage in a Non-Cola annuity? Using a "normal" lifespan seems to favor a non-COLA. I would have more to invest in the market under the non-COLA plan.
I have pretty much ruled out 100% Lump or 100% annuity. My 401k allocation is a 60/40 Boglehead type portfolio.The annuity rates are pretty close to 5% of amount for COLA and 7% for Non-COLA. This seems o be a little better than immediateannuities.com. It is a pretty solid pension plan although anything can happen.
I want to play it pretty safe, but hopefully not way overboard. I just want to find a balance with a high level of certainty for baseline expenses and a good chance of having a little extra.
I hope I have enough details here to start a discussion. If not, I can fill in the holes. Thank you for your time!
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