Midpack
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I am not relying on a pension, but I do have a small one from a previous employer. WRT the pension, the best time for me to retire is age 61 at which time I will have the option of $901/month for life (no COLA) or a lump sum of $123,500. My intent was always to take the lump sum.
But as I get closer I started looking at it as a nest egg and SWD. Most of what I read suggests a 4%± withdrawal rate (not looking to debate the %) would provide good odds of a monthly income lasting more than 30 years. So a $123,500 lump sum at a 4% withdrawal rate would yield $411/month ($125,000 x .04 / 12 month/yr) at the outset. Assuming 3% COLA increase, it would be 28 years before the monthly amounts would be equal and 48 years before the total payout would tip in favor of the lump sum (I hope I don't live that long frankly). That suggests to me I'd have to be brain dead to not take the $901/month instead of the lump sum, over twice as much per month to start and guaranteed not to run out before I die. What am I missing?
But as I get closer I started looking at it as a nest egg and SWD. Most of what I read suggests a 4%± withdrawal rate (not looking to debate the %) would provide good odds of a monthly income lasting more than 30 years. So a $123,500 lump sum at a 4% withdrawal rate would yield $411/month ($125,000 x .04 / 12 month/yr) at the outset. Assuming 3% COLA increase, it would be 28 years before the monthly amounts would be equal and 48 years before the total payout would tip in favor of the lump sum (I hope I don't live that long frankly). That suggests to me I'd have to be brain dead to not take the $901/month instead of the lump sum, over twice as much per month to start and guaranteed not to run out before I die. What am I missing?