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Old 03-12-2021, 09:54 PM   #61
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Yes, today was my decision day. And my decision was to defer my decision

I am really still torn between the options. Every one of the points people brought up here resonate in some measure or another. I did confirm during my conversation with the retirement specialist that I can defer a decision up until my 65th birthday, so have plenty of time. Realistically, it will only continue to grow until my 62nd birthday, but that's still a few years away. I have funding options in the interim, so I realized there isn't a need to push me into a decision before I'm ready.

I really appreciate all of the input here. Only 8 more days of w*rk until retirement is a reality! I'm sure I'll have many more questions to tap into the collective wisdom here as this process keeps moving forward.
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Old 03-13-2021, 05:16 AM   #62
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Yes, today was my decision day. And my decision was to defer my decision

I am really still torn between the options. Every one of the points people brought up here resonate in some measure or another. I did confirm during my conversation with the retirement specialist that I can defer a decision up until my 65th birthday, so have plenty of time. Realistically, it will only continue to grow until my 62nd birthday, but that's still a few years away. I have funding options in the interim, so I realized there isn't a need to push me into a decision before I'm ready.

I really appreciate all of the input here. Only 8 more days of w*rk until retirement is a reality! I'm sure I'll have many more questions to tap into the collective wisdom here as this process keeps moving forward.
good luck and congratulations!
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Old 03-13-2021, 07:49 PM   #63
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I like that decision!
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Old 03-16-2021, 03:50 PM   #64
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Roll the lump sum into an IRA
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Old 03-16-2021, 03:54 PM   #65
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Can that lump sum be rolled over directly to your traditional IRA without taxes being withheld? that would be your best option.
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Old 03-16-2021, 03:57 PM   #66
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Had the same question 10 years ago when I retired. Iím a control freak so took the lump sum and rolled into an IRA. No regrets.
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Old 03-16-2021, 03:58 PM   #67
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I chose the lump sum because I didn't think the company would do well in the future. I was correct. Although the IRA took a hit from market events, we've adapted and are still OK for years.

The company didn't do as well, finally being absorbed by one of its former subsidiaries which is NOT friendly to retirees. Better that I have control of the money.
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Old 03-16-2021, 05:35 PM   #68
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I'm not in the position to take a pension from a large corporation, because I've been self-employed for most of my life. But when I read the "lump sum vs monthly payout" discussions, I am always inclined towards the lump sum.

I'm a business software consultant, and I've worked with hundreds of businesses over my career. I'm very aware that many businesses are poorly managed, don't leverage their resources well, make decisions based on factors aren't the primary drivers for their success, hire the people not suited for their job, etc. And I've worked with business through economic downturns and social and political disruptions that affected their viability. For example, in the 2009, fully half of my client base went out of business, or got bought out by larger companies.

The idea that any business is virtually guaranteed to survive changes over the next 30 or 40 years, doesn't make sense to me. Some of the biggest companies that have existed in my lifetime, are gone and mostly forgotten.

So there is risk in agreeing to a pension payout, and risk in buying "guaranteed income" annuities from an insurance company. In my mind that risk is equivalent to the risk I face if I'm investing in equities. So if the risk is roughly equivalent, I would rather take the lump sum and have some control over the returns.

I think if you've worked for megacorp for a lot of years, its natural to assume that megacorp will outlast you and the pension checks will keep on coming. But there are so many examples of megacorps that no longer exist or were swallowed up by a company that doesn't care about your pension payment.

Wars, pandemics, recessions, political and social upheaval, environmental tragedy, etc. all put that pension at risk, and they have happened repeatedly in our lifetimes.
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Old 03-16-2021, 07:27 PM   #69
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Did anyone take the lump sum because they were afraid of investing? I ask because my mom took her pension in 2007 at 55 but I told her to pension it because she can't handle money at all. She has my dad's roth IRA sitting in cash with and advisor. So a pension was the way to go even not COLA. FWIW she's outlived already the lump sum and even if we'd taken it she's outlived it at 69.

Realistically my family is long lived so her mom is 93 and still alive and her grandmother was 101. And most aunts and uncles lived until 90+. My grandfather died at 78 from COPD and pack or two a day habit. His sisters and brothers all died post 90. So I like my mom's chances. In 14 years x $60k/year = $840k. The payout was like $377k. But the money would have been gone and she pretty much I could bet she'd outlive her lump sum.
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Old 03-16-2021, 08:16 PM   #70
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Did anyone take the lump sum because they were afraid of investing? I ask because my mom took her pension in 2007 at 55 but I told her to pension it because she can't handle money at all. She has my dad's roth IRA sitting in cash with and advisor. So a pension was the way to go even not COLA. FWIW she's outlived already the lump sum and even if we'd taken it she's outlived it at 69.

Realistically my family is long lived so her mom is 93 and still alive and her grandmother was 101. And most aunts and uncles lived until 90+. My grandfather died at 78 from COPD and pack or two a day habit. His sisters and brothers all died post 90. So I like my mom's chances. In 14 years x $60k/year = $840k. The payout was like $377k. But the money would have been gone and she pretty much I could bet she'd outlive her lump sum.
No. I took the lump because I wasn't afraid of investing. My lump sum has grown to 170% in 56 months. That number alone is 85x my expenses. Lump Sum has worked well for me I don't want a monthly check. I enjoy being a pauper. Lumps don't work for everyone thou.
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Old 03-17-2021, 06:48 AM   #71
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I took a lump sum when it was offered back in +/- 2008. Rolled it over into my IRA at Vanguard into one of their target retirement funds and let it ride. One of the best moves I made financially.
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Old 03-17-2021, 07:10 AM   #72
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Originally Posted by ChicagoGal View Post
Yes, today was my decision day. And my decision was to defer my decision

I am really still torn between the options. Every one of the points people brought up here resonate in some measure or another. I did confirm during my conversation with the retirement specialist that I can defer a decision up until my 65th birthday, so have plenty of time. Realistically, it will only continue to grow until my 62nd birthday, but that's still a few years away. I have funding options in the interim, so I realized there isn't a need to push me into a decision before I'm ready.

I really appreciate all of the input here. Only 8 more days of w*rk until retirement is a reality! I'm sure I'll have many more questions to tap into the collective wisdom here as this process keeps moving forward.
It's great that your pension will grow a few more years until you're 62. Hopefully all continues on a success path, you grab SS, and there you are!

I guess Friday's your last day? Everyone here is grinning.
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Old 03-17-2021, 07:30 AM   #73
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.... The idea that any business is virtually guaranteed to survive changes over the next 30 or 40 years, doesn't make sense to me. Some of the biggest companies that have existed in my lifetime, are gone and mostly forgotten.

So there is risk in agreeing to a pension payout, and risk in buying "guaranteed income" annuities from an insurance company. In my mind that risk is equivalent to the risk I face if I'm investing in equities. So if the risk is roughly equivalent, I would rather take the lump sum and have some control over the returns. ...
WADR, if you think that the risk of electing the pension option is roughly equivalent to the risk of investing in equities then you have no idea what you are talking about.

First, pension funds are segregated from company funds... sort of like funds in a trust... and are subject to strict rules and mostly invested in bonds. If the pension fund were unable to pay the the PBGC would step in.

Second, if the pension fund settles the pension by buying an annuity from an insurance company then insurance companies are very strictly regulated and generally very well capitalized... the risk of an insurance company defaulting on a payout annuity is next to nil and if it did happen then there are state guaranty funds that will step in.

Overall the risk of a pension is more than US Treasuries but less than investment grade fixed income securities.
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Old 03-17-2021, 09:48 AM   #74
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I had no choice, pension was the only option. Mainly because retiree healthcare pre-age 65 plus Supplemental Medicare payments per year ($1800/yr MFJ) for life are included. It is comfortable getting a monthly check, that, along with SS, when I file, covers all essentials and then some. It made refinancing my house to 2.5% very easy. No income...no refinancing. If the company offered later, after I was collecting SS to buy out my pension, I would consider it, though.
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Old 03-17-2021, 10:28 AM   #75
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The choice does not have to be either/or. You can take the lump sum and then use part of it to buy an annuity yourself if you want. There are on line annuity calculators you can use to evaluate options/check the fairness of the company annuity offer, etc.
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Old 03-17-2021, 11:25 AM   #76
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^^^^ In this case the pension was very attractive.... in order to replicate the pension life annuity the single premium would be 112% of the lump sum..
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Sounds to me like the plan is giving you an annuity benefit that is worth $956k in terms of today's annuity pricing in exchange for $852k.... I'd take the pension benefit.
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Old 03-18-2021, 09:43 AM   #77
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My father retired around 1994 and he also took the lump sum. I don't know how much he got but he invested in mutual funds and a few companies (Merck, Apple) so he did pretty well for someone who did not earn a lot of money. My parents thought they would run out of money after 20 years of retirement but no, the account is worth around $1.7M today. He passed away last year so it's just now my Mom living off SS & their savings.
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Old 03-18-2021, 12:06 PM   #78
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I had no choice, pension was the only option. Mainly because retiree healthcare pre-age 65 plus Supplemental Medicare payments per year ($1800/yr MFJ) for life are included. It is comfortable getting a monthly check, that, along with SS, when I file, covers all essentials and then some. It made refinancing my house to 2.5% very easy. No income...no refinancing. If the company offered later, after I was collecting SS to buy out my pension, I would consider it, though.

I was going to add this fact about the retiree medical. I am in same position, in that if I took a lump sum, all ties to company are severed and no retiree medical benefits - they are gone for good. In my case, I could not even defer pension until older age, it was become pension recipient at time when leaving company, or lose medical benefit portion. So I became an early retiree reduced pension benefit recipient. It has worked well and I also appreciate that monthly deposit into checking account each month.


The pension also allows me to be more aggressive on my AA, as I view the pension as indirectly part of my fixed income type allocation.
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Old 03-18-2021, 12:15 PM   #79
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Yes, today was my decision day. And my decision was to defer my decision
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Old 03-18-2021, 12:17 PM   #80
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Did anyone take the lump sum because they were afraid of investing?
not quite...

https://www.early-retirement.org/for...ums-82584.html
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