Soon to be 56. Am I in the right place?

Hermit said:
All in one stock? And a telecom to boot? :eek::eek::eek:

Check out the results of MCI, US West, and some of the other major former telecom mega corps before you go that route.
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Second that. Google "business risk".
 
beachbum061 said:
......... I hope to be in a relatively high tax bracket annually going forward............My guess is that I'll be in a lower bracket down the road a bit, .........
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You don't have to guess, if you know your sources of income and their timing, you can figure out your tax bracket right now (less any future law changes). Google "tax torpedo" to find out why anyone might want to do Roth conversions before they hit RMDs.
 
phil1ben said:
I am another 56 year old retiring December 31. There appears to be a number of us 1960 babies. Only a stone's throw from 57. My wife and I are excited about our new life.
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I'll be 57 in February.

Same goes for me and my better half.

Nervous, excited, anxious, happy, etc...

Most important thing is I think we're both 100% ready for this.

Good luck to you and yours.
 
pjigar said:
Second that. Google "business risk".
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All stocks are risky. And I was just trying to make a point with my AT&T scenario.

I would never invest my lifetime earnings in just one stock, or one industry, etc...

I read a book by Mr. Schwab decades ago. Talk about the benefits of investing in the S&P 500, reinvesting dividends, and dollar cost averaging.

I've followed that course for about 30 years and am very pleased with the results.
 
travelover said:
You don't have to guess, if you know your sources of income and their timing, you can figure out your tax bracket right now (less any future law changes). Google "tax torpedo" to find out why anyone might want to do Roth conversions before they hit RMDs.
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Will do.

I've got 14 years before the RMD thing comes around.

Like I said...when the time comes, and I'm settled down into my new retirement life...that's when I'll sit down with a financial planner/CPA to figure out the best way to decrease my tax liabilities.
 
56?? Where ya been??!!

I RE'd at 53 and it was worth it.
 
I retired at 54 along with my wife who was 52. We have a pension that pays the monthly's and retirement and savings that could fully cover our expenses also if for some reason it goes away. Social Security is still down the road a piece but it's there. We've been retired about 16 months and we are having a blast. I highly recommend it.
 
marko said:
56?? Where ya been??!!

I RE'd at 53 and it was worth it.
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LOL...trailing the field, as usual.

Actually, this was exactly the time I planned on almost 30 years ago. Full benefits from my job, both kids done with college, and tired of the frigging rat race.

Just fortunate enough to have reached all those goals and exceeded my financial ones, as well.

This Thursday, I can honestly say that I have much to be thankful for.

Hoping for 30 good years or not working now.
 
OK...so now that we have the initial pleasantries aside.

I've always been an S&P 500 type of guy. It's worked out OK for me and I plan on staying with that strategy going forward with my investable assets.

I've thought about an equal-weight S&P 500 fund and possibly a Dividend Aristocrat fund as possible alternatives.

Any thoughts or ideas...similar or contrary?
 
That's an interesting question you face - deciding between a 670k buyout and a 32k pension for life. I am not an accountant, but I think you can figure out the answer by calculating the present value of a 32k pension. You just have to make a guess about what rate of return you can expect, and how long you will live. But otherwise, you can calculate the present value of your pension using the "PV" function in Excel. Please take these numbers with a grain of salt, and consult with a financial advisor or accountant who can work the numbers for you, but when I plug in the numbers this is what I got:

If you expect to get a 7% return (reasonable for S&P500), and you live for 30 years after retirement (till age 86), the present value of a 32k pension is $397,089, so the buy-out is the better deal by far. If you live for 40 years after retirement (to age 96), the 32k pension is worth $426,614, so the buyout is still a better deal.

If you only expect to get a 3% return and you live for 30 years after retirement (till age 96), the present value of a 32k pension is $627,214, a bit under your buyout offer. If you lived for 40 years after retirement (106 years old) and got a 3% return, then the pension is worth $739,672 in today's dollars, a bit over your buyout offer.

So that is basically your break even point. If you think you will live to more than 106 years, and expect to get 3% or less in returns if you invested the entire $670k buy out lump sum, then keep the pension. Otherwise, take the buy-out lump sum. It seems like the buy-out is the best move.
 
rvbound said:
That's an interesting question you face - deciding between a 670k buyout and a 32k pension for life. I am not an accountant, but I think you can figure out the answer by calculating the present value of a 32k pension. You just have to make a guess about what rate of return you can expect, and how long you will live. But otherwise, you can calculate the present value of your pension using the "PV" function in Excel. Please take these numbers with a grain of salt, and consult with a financial advisor or accountant who can work the numbers for you, but when I plug in the numbers this is what I got:

If you expect to get a 7% return (reasonable for S&P500), and you live for 30 years after retirement (till age 86), the present value of a 32k pension is $397,089, so the buy-out is the better deal by far. If you live for 40 years after retirement (to age 96), the 32k pension is worth $426,614, so the buyout is still a better deal.

If you only expect to get a 3% return and you live for 30 years after retirement (till age 96), the present value of a 32k pension is $627,214, a bit under your buyout offer. If you lived for 40 years after retirement (106 years old) and got a 3% return, then the pension is worth $739,672 in today's dollars, a bit over your buyout offer.

So that is basically your break even point. If you think you will live to more than 106 years, and expect to get 3% or less in returns if you invested the entire $670k buy out lump sum, then keep the pension. Otherwise, take the buy-out lump sum. It seems like the buy-out is the best move.
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Live to more than 106 years:confused:

This is my favorite response so far. LOL.

And a 7% annual return from the S&P? Honestly, from what most of the "experts" are saying these days, 4-5% might be the "new normal" for the S&P. Personally, I believe in history and believe 6-8% annual returns to still be possible long term.

Your calculations appear pretty solid.

Couple of things...you're assuming zero withdrawals to arrive at those present value pension numbers.

Also, when you compare the present value of the pension, you use the 7% return. But you don't do that with the buyout. The "present value" of the buyout with those same 7% returns would provide a pretty penny if left untouched.

Honestly, I'm not trying to decide. I'm taking the buyout. I want that money in my hands. I think I can easily match what I would get from my pension and still hold onto the original buyout.

Sounds good...hope it pans out that way.
 
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