Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Old 09-14-2018, 05:41 PM   #61
Confused about dryer sheets
 
Join Date: Feb 2011
Posts: 4
I would say take the lump sum. You and only you will be in control of your money and you can invest and spend the way you want to. The annuity ties up your money forever. I'm sure you can handle this on your own, or use Vanguard, that's who I use. Cheers.
maddpax1 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 09-14-2018, 06:34 PM   #62
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: 36,264
Quote:
Originally Posted by pb4uski View Post
.... but just know that the PBGC is very underfunded so I'm not sure how much comfort you should take from that. ....
Quote:
Originally Posted by Big_Hitter View Post
isn't the PBGC financially sound from a single-employer perspective?
Quote:
Originally Posted by pb4uski View Post
Not the last time that I looked, but I'll have to check that.
No, even the single employer perspective has more liabilties than assets. According to the 2017 annual report, the single employer plan has net liabilties of $10.9 billion, an improvement from a $20.6 billion of net liabilities at the end of 2016.

The multi-employer plans had a net liabilities of $65.1 billion at the end of 2017 vs $58.8 billion a year earlier.

See https://www.pbgc.gov/sites/default/f...eport-2017.pdf , page 58.
__________________
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 online now   Reply With Quote
Old 09-14-2018, 07:35 PM   #63
Thinks s/he gets paid by the post
VanWinkle's Avatar
 
Join Date: Oct 2017
Location: Tellico Village
Posts: 2,607
I had the exact same choice in 2016. After comparing to buying my own annuity, I decided to go with the pension as it was much better than I could buy. The pension and SS will take care of my living expenses so it takes the worry out of my investments. My genes are good with Dad and Grandfather both living into their 90s. I had a little more fun than them, but should make it to late 80s with any luck. Everything is a gamble, so I went with the best odds of covering my expenses.

VW
__________________
Retired May 13th(Friday) 2016 at age 61.
VanWinkle is offline   Reply With Quote
Old 09-14-2018, 09:32 PM   #64
Full time employment: Posting here.
 
Join Date: Sep 2016
Location: Way up North
Posts: 561
I had one more thought for the OP, so I'm posting this a little late.

Have you set out your plans for when you'll take SS ? The reason this is relevant to the pension/lump sum decision is that delaying SS is the same thing as buying additional SS annuity. The terms on SS are better than you'll get on a pension annuity. If you want additional annuity payments, the first place to get it is by delaying SS to 70. Then if you want additional annuity you could take the pension instead of the lump sum.

It wouldn't make much sense to start SS before age 70 and also take the pension annuity. The better deal in that case is to take the lump sum and use the money for living expenses while delaying SS.
bada bing is offline   Reply With Quote
Old 09-15-2018, 05:09 AM   #65
Thinks s/he gets paid by the post
Badger's Avatar
 
Join Date: Nov 2008
Posts: 3,395
When faced with the decision upon retirement I chose to take the cash. But everyone has their own reasons for deciding what would be best for them.


Since our combined SS and other small pensions take care of all our needs as well as a few wants and since I have always managed my retirement portfolio instead of handing it over to someone else to manage and since I didn't like money evaporating once I die (or what ever arrangement they allow) I took the lump sum and invested it in dividend paying stocks. The annual amount is about 60% of what I would get in an annuity. The dividends are either put in CDs or reinvested. This way the money is available for my wife or children and not lost to the annuity ending.


Now that my wife is taking RMD (mine starts next year) we have exceeded the money necessary for our needs/wants so I don't see an annuity to be of any benefit for us.


Cheers!
Badger is offline   Reply With Quote
Old 09-15-2018, 05:57 AM   #66
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: 36,264
I had a similar decision a couple years ago. I determined the single premium that would replicate the monthly pension benefit to get what the lump sum should be (annual benefit divided by payout rate). The lump sum was about 75% of that amount, so I passed.

Or put another way, had I accepted the lump sum and bought a joint life annuity the monthly benefits would have been 25% lower than my pension payment... so monthly payments was the better course for me since we have plenty of money invested at risk.
__________________
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 online now   Reply With Quote
Old 09-15-2018, 07:25 AM   #67
Gone but not forgotten
imoldernu's Avatar
 
Join Date: Jul 2012
Location: Peru
Posts: 6,335
Might be good to look at the real dollars with respect to taxes. Was important in our decision.
Possible help here:

https://www.kiplinger.com/article/in...are-taxed.html

or here;
https://www.annuity.org/annuities/taxation/
__________________
If you want others to be happy, practice compassion. If you want to be happy, practice compassion.
--Dalai Lama XIV
imoldernu is offline   Reply With Quote
Old 09-16-2018, 08:49 AM   #68
Confused about dryer sheets
 
Join Date: Nov 2013
Location: Albany
Posts: 7
I will be in this situation shortly. I have yet to see this mentioned. If I stay with the company pension (University of California in my case), I maintain access to the group medical plan. While it still costs me money, it is less than buying it on the open market. If I take the lump sum, my ties to the company are over, including access to health insurance. As I will be 56 or so, I have a long way til medicare, so this is a factor.
sdawson is offline   Reply With Quote
Old 09-16-2018, 09:03 AM   #69
Moderator
Jerry1's Avatar
 
Join Date: Nov 2014
Posts: 9,101
Quote:
Originally Posted by sdawson View Post
I will be in this situation shortly. I have yet to see this mentioned. If I stay with the company pension (University of California in my case), I maintain access to the group medical plan. While it still costs me money, it is less than buying it on the open market. If I take the lump sum, my ties to the company are over, including access to health insurance. As I will be 56 or so, I have a long way til medicare, so this is a factor.
That is a major factor. In my case, I am eligible for retiree healthcare benefits no matter which option I take. If I had to take the annuity in order to get the retiree healthcare benefit, it would be a no brainer to take the annuity. It would have to be a pretty bad annuity to make me think otherwise.
__________________
Every day when I open my eyes now it feels like a Saturday - David Gray
Jerry1 is online now   Reply With Quote
Old 12-19-2018, 08:27 PM   #70
Moderator
Jerry1's Avatar
 
Join Date: Nov 2014
Posts: 9,101
Just filed my paperwork. I’ve been living off my buy-out this year but I am officially retired starting 2/1/2019. I ended up choosing the pension. It ended up being $2,216 per month with 100% survivor benefit. The lump sum would have been $458K. I think because DW is 5 years older than me, the differences in other survivor benefits (50% or 66.6%) were so close that we just went ahead and chose the 100%.

The main reason for the decision was diversification and a big dose of security. With this pension, which stars paying on 2/1/19, and mine and DW’s SS, we’ll gross about $74K. In today’s dollars, we can live on that. So basically, we have left, $1.5M to cover the time from now to when we start SS (about 4 years), and to cover inflation. All tolled, I felt comfortable we could make that work. The FA said the he preferred the pension versus the lump sum but that either way, DW and I should be fine. I agree and I think the main reason he believes that and the reason I agree is that our budget is still LBYM and I intend to keep it that way. I especially intend on keeping the budget tight for the next 5 years so as to minimize sequence of returns risk. Once we’re both collecting SS, we can re-evaluate our budget.

So that’s that. Come February, I’m officially retired and on a pension. I will have just turned 58 and DW will be almost 63. And we’re off.
__________________
Every day when I open my eyes now it feels like a Saturday - David Gray
Jerry1 is online now   Reply With Quote
Old 12-19-2018, 09:40 PM   #71
Moderator
 
Join Date: Jul 2017
Posts: 5,659
Quote:
Originally Posted by Jerry1 View Post
Just filed my paperwork. I’ve been living off my buy-out this year but I am officially retired starting 2/1/2019. I ended up choosing the pension. It ended up being $2,216 per month with 100% survivor benefit. The lump sum would have been $458K. I think because DW is 5 years older than me, the differences in other survivor benefits (50% or 66.6%) were so close that we just went ahead and chose the 100%.

The main reason for the decision was diversification and a big dose of security. With this pension, which stars paying on 2/1/19, and mine and DW’s SS, we’ll gross about $74K. In today’s dollars, we can live on that. So basically, we have left, $1.5M to cover the time from now to when we start SS (about 4 years), and to cover inflation. All tolled, I felt comfortable we could make that work. The FA said the he preferred the pension versus the lump sum but that either way, DW and I should be fine. I agree and I think the main reason he believes that and the reason I agree is that our budget is still LBYM and I intend to keep it that way. I especially intend on keeping the budget tight for the next 5 years so as to minimize sequence of returns risk. Once we’re both collecting SS, we can re-evaluate our budget.

So that’s that. Come February, I’m officially retired and on a pension. I will have just turned 58 and DW will be almost 63. And we’re off.
Congratulations! (Had I been in your shoes, I would have made the same choice.)
__________________
Use it up, wear it out, make it do or do without.
MarieIG is offline   Reply With Quote
Old 12-20-2018, 03:14 AM   #72
Full time employment: Posting here.
 
Join Date: Sep 2017
Posts: 816
In my case, my pension annuity looks like this:
$2136/mo
$1837/mo for 100% survivor benefit
For lump sum it I is. $359600

A disadvantage of my annuity is that it is fixed payout, and not COLA. Thus, it's value will shrink over time.
__________________
“Earth is the insane asylum of the universe.”
― Albert Einstein
albireo13 is offline   Reply With Quote
Old 12-20-2018, 04:43 AM   #73
Full time employment: Posting here.
 
Join Date: May 2015
Location: Atlanta suburbs
Posts: 633
Quote:
Originally Posted by Jerry1 View Post
So that’s that. Come February, I’m officially retired and on a pension. I will have just turned 58 and DW will be almost 63. And we’re off.
Congratulations !!!
DEC-1982 is offline   Reply With Quote
Old 12-20-2018, 08:57 AM   #74
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Big_Hitter's Avatar
 
Join Date: May 2013
Location: Les Bois
Posts: 5,761
I requested paperwork for a 3/1 start date

Specifically looking at the SSLIO, which is a restructured, decreasing, annuity based on lump sum interest rates
__________________
You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
Big_Hitter is offline   Reply With Quote
Old 12-20-2018, 09:49 AM   #75
Recycles dryer sheets
FinancialDave's Avatar
 
Join Date: Nov 2012
Location: Olympia
Posts: 150
Quote:
Originally Posted by Jerry1 View Post
Just filed my paperwork. I’ve been living off my buy-out this year but I am officially retired starting 2/1/2019. I ended up choosing the pension. It ended up being $2,216 per month with 100% survivor benefit. The lump sum would have been $458K. I think because DW is 5 years older than me, the differences in other survivor benefits (50% or 66.6%) were so close that we just went ahead and chose the 100%.

The main reason for the decision was diversification and a big dose of security. With this pension, which stars paying on 2/1/19, and mine and DW’s SS, we’ll gross about $74K. In today’s dollars, we can live on that. So basically, we have left, $1.5M to cover the time from now to when we start SS (about 4 years), and to cover inflation. All tolled, I felt comfortable we could make that work. The FA said the he preferred the pension versus the lump sum but that either way, DW and I should be fine. I agree and I think the main reason he believes that and the reason I agree is that our budget is still LBYM and I intend to keep it that way. I especially intend on keeping the budget tight for the next 5 years so as to minimize sequence of returns risk. Once we’re both collecting SS, we can re-evaluate our budget.

So that’s that. Come February, I’m officially retired and on a pension. I will have just turned 58 and DW will be almost 63. And we’re off.
Congrats!

I think you made the right choice.

Dave
FinancialDave is offline   Reply With Quote
Old 03-08-2019, 08:11 PM   #76
Dryer sheet wannabe
 
Join Date: Aug 2008
Posts: 14
I took my lump sum and my 401K, purchased an annuity with one and rolled over my lump sum to an IRA w/Vanguard back in 2006. Annuity guarantees my wife and I lifetime payout regardless if I pass away first, when my spouse dies any monies left goes to my beneficiaries which would be our only child. I need about 4 more years to break even on annuity, I can roll it over to an IRA but then again this guarantees income regardless what happens in market.
The Vanguard account has been paying almost 6% the last 5 years and more over 10 years Vanguard Wellesley Income Admiral (VWIAX). I currently only withdraw about 3-4% annually and it should be plenty till I pass on, I retired at 55 and currently 69 so I don't expect to outlive my savings there nor my wife. Prior to retirement I read as much as I could about money matters on retirement, make sure your investments are with holdings that are in the billions and have a minimum of 7 years profits over a 10 year period, (per Warren Buffet). Good luck!
pacificlou is offline   Reply With Quote
Old 03-09-2019, 06:43 AM   #77
Thinks s/he gets paid by the post
zinger1457's Avatar
 
Join Date: Jul 2007
Posts: 3,222
Quote:
Originally Posted by pacificlou View Post
I took my lump sum and my 401K, purchased an annuity with one and rolled over my lump sum to an IRA w/Vanguard back in 2006. Annuity guarantees my wife and I lifetime payout regardless if I pass away first, when my spouse dies any monies left goes to my beneficiaries which would be our only child. I need about 4 more years to break even on annuity, I can roll it over to an IRA but then again this guarantees income regardless what happens in market.

The cash payout of the annuity to any beneficiaries would not happen after you reach the break even point in 4 years correct? In any case you're probably getting a much better payout from your annuity purchased in 2006 then one would get if purchased today for the same amount.
zinger1457 is offline   Reply With Quote
Reply


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
Lump sum versus monthly pension? Andy Sr Hi, I am... 20 06-26-2016 05:24 AM
Lump sum to invest, DCA in or go lump? Olav23 FIRE and Money 4 03-03-2007 03:22 PM
lump sum or annuity payout on rule of 85 scubamonkey Young Dreamers 8 02-24-2006 04:07 PM
Lump sum or annuity runnerr FIRE and Money 17 07-01-2005 02:39 PM
Annuity vs Lump Sum Pension moguls FIRE and Money 5 05-26-2003 02:09 PM

» Quick Links

 
All times are GMT -6. The time now is 11:18 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.