Travis Bickle
Dryer sheet aficionado
- Joined
- Aug 10, 2017
- Messages
- 30
Hi All -
I am planning to retire at end of March, and have recently received the document package from my employer pension service that I need to file and make the final decision as to whether to go with the lump sum or with the annuity for my pension payout.
The leading choices in this packet are as follows:
1 Default (the "normal form of payment"): 50% Joint & Survivor Annuity: $6817 per month ($3408 per month for spouse after my death)
2 - Lump Sum at time of retirement: $1,611,471
There are a bunch of other options such as 75% joint and survivor, single life annuity, and 5 to 25 year "certain and life annuity" that my wife and I agreed do not make a lot of sense for our situation.
I am age 60 with decent health (no major issues aside from controlled high cholesterol) with a very healthy 56 year old wife. Our life expectancy should be average or better.
I am not solely dependent on the pension for retirement funds as I also have about $2.2M in a 401k (plus SS at age 70) that will be used to fund as well. I am also likely to do some part time consulting after retirement, and my wife will continue to work part time as well. We have two daughters - one in grad school and one a senior in undergrad - and feel they are more than adequately covered for the near term as beneficiaries of the 401k.
My employer is a large pharma company in very good shape financially. Pension fully funded (they stopped offering to anyone hired after 2000 so not too many of us left to cover) and "guaranteed" by PBGC.
My thinking of 10-15 years ago was to take the lump sum, but since the 2008 hiccup our conversation has moved more towards taking the "safer" annuity route.
In the latest paperwork, there is an interesting section where they disclose the "relevant value" of the various options, and all are shown as "equivalent" except the lump sum, which is shown as "107%". The description says that the comparison is conducted via the relevant IRS mortality table and appicable interested rates (.7% first 5 years, 2.55% next 15 years, ,and 3.06% for >20 years).
As I look to make this critical decision in the next couple of weeks, I am hoping someone here may have some thoughts on what to consider when making the decision and if there are any relevant tools or info that can help.
I'm also curious about the "107%" value of payment option for the lump sum. Any thoughts on why they would offer this enhance value and if it should slant my decision towards taking the lump sum?
Thanks for any help or thoughts.
I am planning to retire at end of March, and have recently received the document package from my employer pension service that I need to file and make the final decision as to whether to go with the lump sum or with the annuity for my pension payout.
The leading choices in this packet are as follows:
1 Default (the "normal form of payment"): 50% Joint & Survivor Annuity: $6817 per month ($3408 per month for spouse after my death)
2 - Lump Sum at time of retirement: $1,611,471
There are a bunch of other options such as 75% joint and survivor, single life annuity, and 5 to 25 year "certain and life annuity" that my wife and I agreed do not make a lot of sense for our situation.
I am age 60 with decent health (no major issues aside from controlled high cholesterol) with a very healthy 56 year old wife. Our life expectancy should be average or better.
I am not solely dependent on the pension for retirement funds as I also have about $2.2M in a 401k (plus SS at age 70) that will be used to fund as well. I am also likely to do some part time consulting after retirement, and my wife will continue to work part time as well. We have two daughters - one in grad school and one a senior in undergrad - and feel they are more than adequately covered for the near term as beneficiaries of the 401k.
My employer is a large pharma company in very good shape financially. Pension fully funded (they stopped offering to anyone hired after 2000 so not too many of us left to cover) and "guaranteed" by PBGC.
My thinking of 10-15 years ago was to take the lump sum, but since the 2008 hiccup our conversation has moved more towards taking the "safer" annuity route.
In the latest paperwork, there is an interesting section where they disclose the "relevant value" of the various options, and all are shown as "equivalent" except the lump sum, which is shown as "107%". The description says that the comparison is conducted via the relevant IRS mortality table and appicable interested rates (.7% first 5 years, 2.55% next 15 years, ,and 3.06% for >20 years).
As I look to make this critical decision in the next couple of weeks, I am hoping someone here may have some thoughts on what to consider when making the decision and if there are any relevant tools or info that can help.
I'm also curious about the "107%" value of payment option for the lump sum. Any thoughts on why they would offer this enhance value and if it should slant my decision towards taking the lump sum?
Thanks for any help or thoughts.