Join Early Retirement Today
Thread Tools Display Modes
Old 04-23-2008, 09:05 AM   #21
Dryer sheet wannabe
Join Date: Mar 2007
Posts: 11
Originally Posted by militaryman View Post
Ok I am jealous!!


Isn't it unusual (unheard of for me) for a company to allow you to pick other than a spouse or dependant child (disabled for example) as a beneficiary for annuity payments.

I mean this really stretches a company's retirement liability for someone by perhaps 30 years longer than needed.

I sure would strongly consider this option if available to me.
It's a possible good option for a single person with just one child. Since only one beneficiary can be named, the option does not work well for my other single co-workers with more than one child.

Of course, the beneficiary's age is worked into the benefit formula. That's why I will get $4,250 instead of $4,718/mo. If my daughter were much younger, then I would get even less.
SSQQ is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 04-23-2008, 10:09 AM   #22
Recycles dryer sheets
Abreutime's Avatar
Join Date: Jan 2008
Posts: 325
Dumb question about annuity's through your previous employer: Do they tend to use an outside company of fund it themselves?

I ask because this person is in fine shape, and should seek to minimize the effect that low probability events (her employer pulling an Enron) will have on her portfolio. If the pension is also funded by megacorp, then that is just an added risk to having so much company stock.
Abreutime is offline   Reply With Quote
Old 04-24-2008, 01:50 PM   #23
Moderator Emeritus
bssc's Avatar
Join Date: Dec 2005
Posts: 10,125
Hi and welcome

As an addtional point, my DW has about 350K of her 401(k) in her company stock. Good performer, etc (GE) but I convinced her to move 250K of it to the SP500 Index fund. She was quite happy when it dropped 12% last week. While I doubt that it will Enron, it is so huge that I don't think that it will outperform the market.
Angels danced on the day that you were born.
bssc is offline   Reply With Quote
Old 04-24-2008, 02:27 PM   #24
Full time employment: Posting here.
cardude's Avatar
Join Date: Feb 2006
Posts: 599
One of the reasons I waited so long to post is that I am a bit lacking in financial savvy. I'm not real sure what you just said. Did you say to consider not taking the monthly annuity and to take the lump sum instead, in order to give my daughter a better inheritance? (I have no idea what SWR means in financial lingo....means statewide rule in my circles.)
Sorry for the confusion. I was trying to make the case that by taking the lump sum and diversifying it into several different asset classes that you could probably do better than just taking the annuity. By better, I think your daughter could have more money to spend after you are no longer around. The SWR means safe withdrawl rate, which is the maximum you can safely withdraw from your portfolio and have it weather most market downturns. That means if your portfolio is worth $1,400,000, you (or your daughter) may be able to safely withdraw $42,000-56,000 out each year for 50 years or so instead of the $25,800 per year the annuity would provide.

However, if you don't think you can put together the right kind of portfolio (you probably can), watch over it and rebalance it, and stick to the SWR, then you are better off just taking the annuity IMO. And I agree with everyone else-- your 401K has too much company stock in it.
cardude is offline   Reply With Quote
Old 04-24-2008, 02:52 PM   #25
Thinks s/he gets paid by the post
Milton's Avatar
Join Date: Apr 2007
Posts: 2,360
I agree regarding the need for diversification in your 401K. Since the annuity is unindexed, the 401K is essentially the only inflation protection that your retirement will offer you (at least until your social security payments kick in). You are in a good position now and it's simply not worth incurring the company-specific risk, regardless of how well the stock has recently performed.

I am usually not one to encourage economic subsidies to adult children (see generally chapter 5 of The Millionaire Next Door). But you have reasons that make sense to you, and it seems like you can afford it (the $468 monthly difference the 50% option will cost isn't going to break you). So I wouldn't worry about it.
"To know what you prefer, instead of humbly saying Amen to what the world tells you you ought to prefer, is to have kept your soul alive". Robert Louis Stevenson, An Inland Voyage (1878)
Milton is offline   Reply With Quote
Old 04-24-2008, 05:50 PM   #26
Moderator Emeritus
SteveR's Avatar
Join Date: Jul 2005
Posts: 2,811
Welcome SSQQ,

You are receiving a lot of good advice. Here is a bit more to add to the pile.

My first wife took half of what was in my 401(k), 90% of the house equity (long story), and I got $>100,000 in debt to pay off while being a single parent and paying alimony. Not exactly a good combination to even think about retirement much less an early one.

A few years later I remarried and my wife and I were employed by the same company. We both had company stock in our 401(k) plans; she had 100% stock which she had accumulated for well over 25 years. When I started looking at her financial picture I nearly had a heart attack. I finally convinced her to start moving some of it to more diversified funds. Over a couple of years we managed to move about 40% of it....then the company ran into trouble and lost 70% of the stock price in a few days (still has not made it back up in over 10 years). We "lost" a lot of value in those few days.

I have strong opinions on having too much invested in one company. You have your pension, your job, your insurance and a large portion of your 401(k) attached to the same company. I believe that is too many eggs in one basket. I have some former company friends that were in the wrong division of the company and it was suddenly sold off. Their benefits were reduced and others frozen at the pre-sale level. Many lost pensions and stock options. Others lost their jobs. It was ugly and can happen to anyone.

Back to my story...
Flash forward 10 years from my marriage to wife #2. We both saved a ton, invested a ton and managed to retire early. We moved and found a new job (another long story). Seven months into retirement she suddenly passed away. Since then I have remarried and retired last year. My current wife became disabled soon after we were married. (another long story).

So what is the point of all this? Simply that you never know what will happen tomorrow. Don't trust your company to take care of you or to provide for you. You have to provide for yourself. Too many eggs in the company basket can lead to disaster.

If you don't want to do your own financial planning then by all means seek out a Financial Planner who works by the hour and not on commission so he will look out for you and not himself. You can do a great deal of self planning without a huge amount of knowledge by just reading the books mentioned here and by using a low cost brokerage house (Vanguard, etc.) and rolling over you 401(k) when you retire, to a self-directed IRA with several different low cost index funds. Balance and diversification are key and not that hard to do with Vanguard.

Take your time and do your homework. Don't do anything without some kind of plan. The market is down right now and many see that as a good time to buy. If your company plan has some index funds you might want to research them and see what works best for you and move some of that company stock into them while prices are down. Remember, you are still young and your investments need to work to make an income stream for you in the future (10+) years down the road.

Good luck and welcome to the board.
Work? I don't have time to work....I'm retired.
SteveR is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
Lady Bird Martha Other topics 6 07-12-2007 02:22 PM
Lady Longs to Retire ASAP Beryl Hi, I am... 12 06-25-2007 02:31 AM
Elderly Lady Suffers a Heart Attack After Purse Snatching cube_rat Other topics 0 07-04-2006 11:20 AM
Wow, lady jumps to her death where I live OldAgePensioner Other topics 21 06-26-2006 04:37 PM
Financial Implications of Marrying an Asian Lady OldAgePensioner FIRE and Money 72 04-10-2006 12:47 PM

» Quick Links

All times are GMT -6. The time now is 04:52 AM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.