Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Age 55 and two small pensions -- what would you do?
Old 01-01-2022, 11:55 PM   #1
Recycles dryer sheets
 
Join Date: Sep 2019
Posts: 64
Age 55 and two small pensions -- what would you do?

Hi all,

I will turn 55 in May 2022. At that point, I become eligible for payouts from two small pensions. For the single-life annuity option, I could receive a total of about $300 a month at age 55 or $600 a month at age 65. I am married and of course the joint-and-survivor option is less. The pension plans have no lump-sum options. There are no adjustments for inflation.

One of my former employers went bankrupt and the pension is administered by the federal Pension Benefit Guaranty Corporation. Is that a bad or a good thing?

What would you do? Would you start taking the money or wait till you're 65? I'm seriously contemplating taking the money and investing it in a brokerage account. I might think differently if the pensions were adjusted for inflation. I like my odds in the stock market better, particularly with one of the employers going bankrupt. (The other might soon follow.)

I'm angling toward retirement but will not retire completely. My wife likes her job and we're probably firmly in the 22% federal tax bracket, regardless of what I do.

Interested in any thoughts, particularly from those who have been in similar positions. Thanks.
SAinMinn 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 Early-Retirement.org 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 01-02-2022, 12:08 AM   #2
Thinks s/he gets paid by the post
 
Join Date: Sep 2013
Location: Ventura County
Posts: 1,400
Using an annuity calculator the present value of the $600 at 65 is a bit more than the the $300 at 55. That said I think this calculator doesn't adequately factor in inflation risk nor your projected return if you invested the monthly payout. For this reason I'd probably take the $300 now and invest it as you suggested.

It's not a big deal either way. If you're in the 22% bracket these pensions aren't a big part of your planned retirement income whichever option you choose.
stepford is offline   Reply With Quote
Old 01-02-2022, 05:36 AM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 32,926
According to immediateannuities.com, a $500/month pension beginning at age 55 for a 55 yo male in MN is valued at $127,119 and a $600/month pension beginning at age 65 for a 55 yo male in MN is valued at $88,999... so I would take the $500/month.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline   Reply With Quote
Old 01-02-2022, 07:04 AM   #4
Full time employment: Posting here.
 
Join Date: Aug 2015
Posts: 965
Except it was $300 & $600, not $500. Such a relatively small amount, of your income, just take the $300.
Perryinva is offline   Reply With Quote
Old 01-02-2022, 11:16 AM   #5
Thinks s/he gets paid by the post
Gotadimple's Avatar
 
Join Date: Feb 2007
Posts: 2,413
PBGC is a good thing - to answer your question. It is the federal government paying your pension. PBGC is an insurance company owned by the US Government, employers buy pension guarantee insurance through this federal agency.

"PBGC guarantees the "basic benefits" you earned before your pension plan’s termination date (or the date your employer’s bankruptcy proceeding began, if applicable) up to legal limits set by Congress. Benefits include:

Pension benefits at normal retirement age
Most early retirement benefits
Annuity benefits for survivors of plan participants
Disability benefits (see exception below) . . ."

https://www.pbgc.gov/wr/benefits/guaranteed-benefits
__________________
Only got A dimple, would have preferred 2!
Gotadimple is offline   Reply With Quote
Old 01-02-2022, 11:32 AM   #6
Thinks s/he gets paid by the post
skyking1's Avatar
 
Join Date: Feb 2021
Location: Puget Sound
Posts: 2,237
Another vote for take the 300. My reasoning is the same, not a big part of your retirement either way and best to get it going.
__________________
Class of 2023
skyking1 is offline   Reply With Quote
Old 01-02-2022, 12:18 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
JoeWras's Avatar
 
Join Date: Sep 2012
Posts: 9,900
Good discussion. I've been separated from my original MC over 25 years but still have a pension coming anywhere from age 62 to 65 (my choosing). For the last two decades, this info has been collecting dust. Now with 62 coming into site in a few years, I've dusted it off and I'm thinking. I have no lump provisions either, it has to be monthly.

So my numbers:
- Age 62, $385, annuity lump value: $85k
- Age 65, $520, annuity lump value: $105k

I was first thinking of "longevity insurance" and just letting it ride until 65. But the more I think about it, the more I want to take it at 62 because these few bucks are no insurance.

Perhaps I can use it as mad money and blow some dough instead. I never look at money that way, but with this little nugget, maybe I should, if just for this.
__________________
Retired Class of 2018


JoeWras is online now   Reply With Quote
Old 01-02-2022, 12:45 PM   #8
Thinks s/he gets paid by the post
skyking1's Avatar
 
Join Date: Feb 2021
Location: Puget Sound
Posts: 2,237
i have a second small pension with no flexibility, ~300 @65
I always look at it like the mobile phone bills
__________________
Class of 2023
skyking1 is offline   Reply With Quote
Old 01-02-2022, 11:51 PM   #9
Recycles dryer sheets
 
Join Date: Sep 2019
Posts: 64
Thanks for your thoughts and feedback everybody, I appreciate it.

When I left the second pension-providing job in 2003, I joked that the monthly amounts would pay for one of my prescription meds when I retired. I wasn't far off, except I'm not retiring and luckily am not on any prescription meds.

It's not a lot of money, but it's not nothing either -- if that double negative makes sense. I might as well put it to work. I'm definitely leaning toward starting the payments when I turn 55 in May.
SAinMinn is offline   Reply With Quote
Old 01-03-2022, 07:27 AM   #10
Confused about dryer sheets
 
Join Date: Nov 2020
Location: lancaster
Posts: 7
I'm in a similar spot as the OP, I'm 57 & retired in 2020. Have two pensions that are a little larger, not COLA'd. Have weighed lump-sum vs taking at age 65 in my mind for a while.

A 3rd option that I only became of aware of recently is just letting it ride past age 65. At least one of the two pensions will continue to increase (both the lump value and the monthly benefit) after age 65, I'm thinking this might be the better option for me. I'm not married so a survivor's benefit is not a consideration for me. I'd look at it as both longevity insurance and an investment that is not subject to market risk.
Fired2020 is offline   Reply With Quote
Old 01-03-2022, 09:11 PM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 32,926
Quote:
Originally Posted by pb4uski View Post
According to immediateannuities.com, a $500/month pension beginning at age 55 for a 55 yo male in MN is valued at $127,119 and a $600/month pension beginning at age 65 for a 55 yo male in MN is valued at $88,999... so I would take the $500/month.
Quote:
Originally Posted by Perryinva View Post
Except it was $300 & $600, not $500. Such a relatively small amount, of your income, just take the $300.
You are correct... $300 and $600... so the values are $76,271 and $88,999... I'm patient... I would take the $600 all else being equal.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline   Reply With Quote
Old 01-03-2022, 10:00 PM   #12
Thinks s/he gets paid by the post
 
Join Date: Aug 2017
Posts: 1,025
I'd take the $300 and invest it.
badatmath is online now   Reply With Quote
Old 01-04-2022, 03:35 AM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Koolau's Avatar
 
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 12,275
I'd be tempted to take the money and add it to current investments (DCA style.) Having said that, YMMV and you didn't pay us for the advice.
__________________
Ko'olau's Law -

Anything which can be used can be misused. Anything which can be misused will be.
Koolau is offline   Reply With Quote
Old 01-04-2022, 05:37 PM   #14
Recycles dryer sheets
retired1's Avatar
 
Join Date: Jun 2011
Posts: 292
Even if it's $300, it's better than $0. Hopefully it's adjusted for Inflation. Put it in an Index MF and watch it grow !!
retired1 is offline   Reply With Quote
Old 01-04-2022, 08:47 PM   #15
Recycles dryer sheets
 
Join Date: Sep 2019
Posts: 64
Thanks all ... interesting discussion. I appreciate the thoughts.

For sure, it's not a ton of money, but as was said it's better than zero.

If the pension was adjusted for inflation, I might let it ride. But it's not. So I probably won't. Have a few months to decide.
SAinMinn is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
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
Small things and small decisions target2019 Other topics 11 09-09-2020 03:50 PM
What two lenses would you Pick to travel with and why? Chuckanut Travel Information 25 02-01-2018 11:49 AM
So, do you feel your age? Act your age? Like your age? vickko Life after FIRE 84 04-10-2010 01:47 PM
When you buy a car, what age or age range do you usually buy? cloudeleven Other topics 21 05-27-2008 08:20 AM
"Two lines in the signature" doesn't equal two lines. Nords Forum Admin 4 02-09-2008 06:20 PM

» Quick Links

 
All times are GMT -6. The time now is 06:36 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2023, vBulletin Solutions, Inc.