papadad111
Thinks s/he gets paid by the post
- Joined
- Oct 4, 2007
- Messages
- 1,135
Helping a friend who just retired get a few financials in order.
He is 45 has non cola pension that will pay 900 per month at age 65. Or take it at retirement and get approx 300 per
Q: He could take it monthly or a lump sum now of approx 63K usd and roll into an IRA and lump grows to 100k if he waits til 65.
That's approx 6% return if he takes the pension now vs lump sum now and his tax rate post retirement will be low - can't say same if he dumps the money onto an Ira as he has lots of tax deferred savings and likely draw that down later at a rate that may trigger higher than 15 pct taxation.
Is there a tool to plug in returns, taxes, etc to determine if a lump sum now or monthly payment now is better?
There is a 50 pct spousal survival been too if I understand him.
My conventional wisdom says take the lump sum now and roll it to an IRA - he could always buy an annuity with that cash if he wanted a steady guarantees til death income later - he can probably do better than the pension return.
What do you all think ?
He is 45 has non cola pension that will pay 900 per month at age 65. Or take it at retirement and get approx 300 per
Q: He could take it monthly or a lump sum now of approx 63K usd and roll into an IRA and lump grows to 100k if he waits til 65.
That's approx 6% return if he takes the pension now vs lump sum now and his tax rate post retirement will be low - can't say same if he dumps the money onto an Ira as he has lots of tax deferred savings and likely draw that down later at a rate that may trigger higher than 15 pct taxation.
Is there a tool to plug in returns, taxes, etc to determine if a lump sum now or monthly payment now is better?
There is a 50 pct spousal survival been too if I understand him.
My conventional wisdom says take the lump sum now and roll it to an IRA - he could always buy an annuity with that cash if he wanted a steady guarantees til death income later - he can probably do better than the pension return.
What do you all think ?