Planning to Retire at 55

[Midpack]

Thank you Cobra9777

Can you tell possibly tell me what you ended up doing and why?

I have read some of the post's and they seem to recommend annuitizing a part of your assests which lower the SWR on remaining assests. If you know of any specific really good posts on this please let me know.

Not Cobra, but here's some thoughts I posted a while ago http://www.early-retirement.org/forums/f28/lump-sum-vs-pension-summary-66781.html. I took a lump sum over a pension three years ago, and I can explain again if you like. But it's a personal decision for each of us, and not strictly dollars and cents.

 

[Cobra9777]

Thank you Cobra9777

Can you tell possibly tell me what you ended up doing and why?

I have read some of the post's and they seem to recommend annuitizing a part of your assests which lower the SWR on remaining assests. If you know of any specific really good posts on this please let me know.

The thread linked by Midpack is very good. I remember reading through his reference guide several times. Many others as well. Just search and you'll find a wealth of information and viewpoints.

I elected the annuity option for several reasons, but mainly to reduce risk and uncertainty by covering ~50% of our spending with guaranteed income. When SS kicks in, the percentage goes higher, and then drifts lower because the pension is not COLAed. It also had a decent payout at 6.5%, and was 100% funded with a solid company.

On the flip side, if the market performs as well as it has the last 30 years, a 60/40 lump sum portfolio would have beaten the pension annuity and left some money for my heirs (...in most cases). I remember running some FIRECalc models to see how the lump sum would have performed vs the fixed annuity, and the success rates were quite high (70-80%). So you definitely forego some potential upside in exchange for reduced risk and uncertainty. In my judgement, with interest rates sitting near zero, I don't think stocks and bonds will perform as well as the last 30 years. We're just at the tail-end of a 30-year run-up in stocks/bonds after interest rates peaked in the mid 80s.

I paid off my mortgage with part of my taxable portfolio for same basic reason... to reduce reliance on future market performance to meet retirement expenses. I have lower expenses and a smaller portfolio, with less risk and uncertainty. You'll find many here who advocate holding a low-interest-rate mortgage in retirement, on the expectation that the market will outperform the mortgage rate. History is on their side, but again, I'm a little more bearish going forward and thus prefer to eliminate that unknown.

Good luck.

 

[rodi]

Thanks rodi

I put 3114K$ (pension lump sum + current investable assets), 50/50 total market, 3% inflation, 125K$ year spend, 35 year retirement, 21.6K$/year my SS at 62, 10,404$/year wife SS at 66, 1% annual fee costs (instead of 0.18% in program). I get 94.5% from Firecalc.

I did not change the expense part.
I also realize I didn't unclick COLA on the pension - and I did pension, rather than lump sum.

That's probably the difference.

 

[imoldernu]

You're good to go!
... and if maybe you need a part time chauffeur, gardener or doorman, I 'm available.

Congratulations and welcome to the ranks of the unemployed.

 

[phil70]

klbvbb01 - I hope to be in a very similar situation in 10 years. This gives me confidence it will work out.

 

[sengsational]

- Includes recent quote on retiree medical plan from megacorp

If your after-tax investments did not throw-off much income, it might be possible for you to qualify for PPACA subsidies. Could you get your income under $62,920? Probably not if you annuitize. Sticking most of the $2M into non-income producing investments might not be worth it, but I figured I'd mention it.

 

[klbvbb01]

If your after-tax investments did not throw-off much income, it might be possible for you to qualify for PPACA subsidies. Could you get your income under $62,920? Probably not if you annuitize. Sticking most of the $2M into non-income producing investments might not be worth it, but I figured I'd mention it.

thanks for suggestion sengsational

 

[klbvbb01]

You're good to go!
... and if maybe you need a part time chauffeur, gardener or doorman, I 'm available.

Congratulations and welcome to the ranks of the unemployed.

thanks imoldernu

 

[klbvbb01]

thanks phil70

save/plan hard and you will do great