Foolish to delay pension one year?

[badatmath]

You all may be right but I am actually one of the lowest paid people that I typically speak with at work. Most are older and married so 2 incomes. I live in a tiny house but it is paid for.

I trust you all to be honest with me and its reassuring to talk about this because it is an unpleasant thing to go through.

 

[pacergal]

Will the PTO payments each month be enough to pay your bills/manage your budget?
If so, then I would delay for a higher payment, it sounds like it would only be for one year before you get the higher pension payment.

Will taking pension now, plus your PTO put you in a higher tax bracket? That would point to delay also.

Figuring finances for retirement is a big issue, made even harder when it is forced earlier than planned.
Best of Luck in your decision. You don't have to tell any co workers what you decide--none of their business.

 

[finnski1]

You all may be right but I am actually one of the lowest paid people that I typically speak with at work. Most are older and married so 2 incomes. I live in a tiny house but it is paid for.

I trust you all to be honest with me and its reassuring to talk about this because it is an unpleasant thing to go through.

Financial acumen doesn't always equate with high income. In fact many times I have seen the opposite. Many people with high incomes can "justify" their spending and still not save any where enough for retirement.
People on here have no vested interest in not being honest with you and have no ulterior motives that your colleagues might.

 

[Al18]

Don’t let the math distract you from your decision. It’s all about how much you enjoy or don’t enjoy your job, the people and your plans after retirement. I switched to part-time employment at the same company for the last 3 months to get a taste of early retirement. I planned to retire at 55, but worked until 56 - it was a bit less rushed.

 

[MarieIG]

You all may be right but I am actually one of the lowest paid people that I typically speak with at work. Most are older and married so 2 incomes. I live in a tiny house but it is paid for.

I trust you all to be honest with me and its reassuring to talk about this because it is an unpleasant thing to go through.

I'm sorry you have to go through this, but you are not alone. Having a paid off house is great as lowers your monthly expense at this time. The fact that you are planning is also a benefit.

 

[MarieIG]

Financial acumen doesn't always equate with high income. In fact many times I have seen the opposite. Many people with high incomes can "justify" their spending and still not save any where enough for retirement.
People on here have no vested interest in not being honest with you and have no ulterior motives that your colleagues might.

This is true.

 

[Chuckanut]

PB4's numbers pretty much settle the math part of the decision. All the remains are the subjective factors, which are mainly related to health and your ability to enjoy retirement.

You are sitting pretty here. You have to figure out which is the greater of two good things. Congratulations.

 

[badatmath]

Sad to say I don't really have a budget but I should be able to figure it out as I go.

We will let PB's math rule as I can't really afford to be wasteful. It is not like difference of getting a new Porsche or a Ferrari where you buy the one you love. I need the one that keeps me solvent.

Thanks to all.

 

[GravitySucks]

Apply for unemployment anyway. The worst they will do is tell you you are not eligible.
Best of luck!

 

[jollystomper]

I started my pension right after I retired, but a month later received a surprise bonus from Megacorp that I had not been expecting. That, along with my severance and vacation pay, would have almost equaled my paycheck income for about 5 months. Then I received an inheritance that was more than double and earlier than expected later that year, which meant severance+vacation pay + bonus + inheritance = close to a years salary).

Had I been more of a "risk taker" (willing to live off cash for a few months before knowing about the bonus and inheritance) I would have delayed by pension for at least 6 months to the start of the next year, even though the gain would have been relatively small (about $1000/year). So it just depends on your comfort with living without a pension income for a year.

 

[Aerides]

It's about a 12 year break even, so at 55ish, delaying means you've made the right choice by 67 (assuming no survivor benefits). That's good odds, delay and figure out a way to cover year 1 - and yes unemployment should work for you so that's your next job.

 

[badatmath]

I'm not much of a risk taker but it does feel like it will work. A little worried how to get the money paid for the insurance but they claim I can set up direct debit after I am gone.

 

[G-Man]

It's about a 12 year break even, so at 55ish, delaying means you've made the right choice by 67 (assuming no survivor benefits). That's good odds, delay and figure out a way to cover year 1 - and yes unemployment should work for you so that's your next job.

Just curious on how "unemployment" would work in this situation. Retire and sign up for unemployment?

 

[RetiredAndLovingIt]

Just curious on how "unemployment" would work in this situation. Retire and sign up for unemployment?

I would think because he is losing his job through no fault of his own and retired to protect his retiree benefits. I checked his states website which states
To qualify for UI benefits, you must be out of work through no fault of your own. Workers who are laid off for economic reasons due to a plant closing, a reduction-in-force, or because of lack of work, for example -- are considered to be unemployed through no fault of their own. If your reason for separation from your last job is due to some reason, a determination will be made about whether or not you are eligible for benefits. All determinations of whether or not a person is eligible for benefits are made by the appropriate Arizona Revised Statute, Administrative Code or applicable federal laws.

https://des.az.gov/services/employm...l/eligibility-unemployment-insurance-benefits

He should also qualify for assistance to find a new job and possible additional retraining due to his age which may even extend unemployment benefits.
It's certainly worth applying, they can only say no.

Also once he is unemployed, he might qualify for many assistance programs that might be available to him while he is unemployed. Most utility companies (gas/electric) offer discounted rates for low income individuals and when you're unemployed you're low/no income. The discount is usually around 20% that will last for a couple of years before needing to be recertified. They also offer FREE home weatherization programs and free appliance upgrades if qualified. I applied to the gas company and got a brand new water heater, and gas heating system installed for free. They also installed 9 10 year carbon monoxide/smoke detectors in every room in my house at no cost and weatherized my home to help save on energy costs. The electric company offered me a new a/c system and swamp cooler but I cancelled the installation at the time because of Covid. It's still pending and they bug me from time to time about it so I just need to contact them to schedule the install. I also get 20% discount on my gas and electric bills. I'm able to control my income for the ACA which also helped me qualify for these programs.

 

[G-Man]

I would think because he is losing his job through no fault of his own and retired to protect his retiree benefits. I checked his states website which states
To qualify for UI benefits, you must be out of work through no fault of your own. Workers who are laid off for economic reasons due to a plant closing, a reduction-in-force, or because of lack of work, for example -- are considered to be unemployed through no fault of their own. If your reason for separation from your last job is due to some reason, a determination will be made about whether or not you are eligible for benefits. All determinations of whether or not a person is eligible for benefits are made by the appropriate Arizona Revised Statute, Administrative Code or applicable federal laws.

https://des.az.gov/services/employm...l/eligibility-unemployment-insurance-benefits

He should also qualify for assistance to find a new job and possible additional retraining due to his age which may even extend unemployment benefits.
It's certainly worth applying, they can only say no.

Also once he is unemployed, he might qualify for many assistance programs that might be available to him while he is unemployed. Most utility companies (gas/electric) offer discounted rates for low income individuals and when you're unemployed you're low/no income. The discount is usually around 20% that will last for a couple of years before needing to be recertified. They also offer FREE home weatherization programs and free appliance upgrades if qualified. I applied to the gas company and got a brand new water heater, and gas heating system installed for free. They also installed 9 10 year carbon monoxide/smoke detectors in every room in my house at no cost and weatherized my home to help save on energy costs. The electric company offered me a new a/c system and swamp cooler but I cancelled the installation at the time because of Covid. It's still pending and they bug me from time to time about it so I just need to contact them to schedule the install. I also get 20% discount on my gas and electric bills. I'm able to control my income for the ACA which also helped me qualify for these programs.

Hmm. I would think they would look at your bank account as well as retirement investment accounts, etc.

 

[pb4uski]

Don’t let the math distract you from your decision. It’s all about how much you enjoy or don’t enjoy your job, the people and your plans after retirement. I switched to part-time employment at the same company for the last 3 months to get a taste of early retirement. I planned to retire at 55, but worked until 56 - it was a bit less rushed.

I think you need to go back and read the OP. The OP is leaving his current employer no matter what... the question is just whether to start collecting pension benefits now or a year from now.

 

[pb4uski]

Hmm. I would think they would look at your bank account as well as retirement investment accounts, etc.

Why in the world would you think that?

 

[Montecfo]

Impossible to say without knowing base amount. You can easily run breakeven calculation. For comparison sake many folks delay SS to get 8% increase per year which is considered a great deal. You could also compare the cost to buy $172/mo using a SPIA.

Well, it is a great deal if you live past breakeven. Otherwise no.

 

[RetiredAndLovingIt]

Hmm. I would think they would look at your bank account as well as retirement investment accounts, etc.

Who are "they" that you think have the right to access anyones accounts etc?
I am retired and my only income comes from IRA withdrawals and interest income all of which is reported on my tax return. That's the only income that matters to qualify for ACA subsidies and other programs.
That's just the way it works, it may not make sense or even seem fair to you, it certainly didn't to me when I was laid off after close to 40 years but it certainly helped me keep my head above water and helped reduce my bills while I figured things out and wait to get my social security.

 

[G-Man]

Who are "they" that you think have the right to access anyones accounts etc?
I am retired and my only income comes from IRA withdrawals and interest income all of which is reported on my tax return. That's the only income that matters to qualify for ACA subsidies and other programs.
That's just the way it works, it may not make sense or even seem fair to you, it certainly didn't to me when I was laid off after close to 40 years but it certainly helped me keep my head above water and helped reduce my bills while I figured things out and wait to get my social security.

Sorry. I'm just seeking to understand. Thanks for the response.

 

[target2019]

If you leave employment, or they move on without you, doesn't the pension stop growing?

 

[Big_Hitter]

If you leave employment, or they move on without you, doesn't the pension stop growing?

early retirement subsidies are part of the participant's accrued benefit

 

[badatmath]

The reason the pension would go up if I delayed it is due to age increasing. I will make too much this year for any benefits in reduced utilities (due to PTO payout) but next year that might work. It is really a depressing situation tbh.

 

[pb4uski]

.... It is really a depressing situation tbh.

I can help you with that. Give me the pension benefits and I will pay the taxes on the pension benefits for you... I would not want you to be depressed.

 

[badatmath]

I can help you with that. Give me the pension benefits and I will pay the taxes on the pension benefits for you... I would not want you to be depressed.

Ha being laid off is depressing in and of itself. People are telling me I must get another job and they are not really wrong, both for reasons of money and sanity but IDK. It is still overwhelming.