Finally FI
Dryer sheet aficionado
- Joined
- Nov 12, 2022
- Messages
- 43
I've noticed that quite a few ER members have non-COLA pensions, but at the same time the general sentiment is negative about SPIAs.
They appear to be the same thing to me. Are they different somehow?
When I retired last year, I chose a lump sum payout of a pension I had because the company's annuitized options were lower than what I could get elsewhere later due to interest rates increasing. My pension cash values are about 20% of our portfolio, and annuitizing them would cover the majority of our yearly expenses in today's dollars, not including healthcare.
When I run spreadsheets and simulators like i-ORP, they all skew to significantly higher (real, before inflation) income later in life because of current ACA subsidy AGI limits and future Social Security income, so the inflation-related reduction of SPIA payments over time doesn't seem like it would matter with the majority of our portfolio remaining in low-cost index funds.
I figured I'd ask because as with many topics, things are not always what they seem and the many smart people here can explain why.
They appear to be the same thing to me. Are they different somehow?
When I retired last year, I chose a lump sum payout of a pension I had because the company's annuitized options were lower than what I could get elsewhere later due to interest rates increasing. My pension cash values are about 20% of our portfolio, and annuitizing them would cover the majority of our yearly expenses in today's dollars, not including healthcare.
When I run spreadsheets and simulators like i-ORP, they all skew to significantly higher (real, before inflation) income later in life because of current ACA subsidy AGI limits and future Social Security income, so the inflation-related reduction of SPIA payments over time doesn't seem like it would matter with the majority of our portfolio remaining in low-cost index funds.
I figured I'd ask because as with many topics, things are not always what they seem and the many smart people here can explain why.