Pension Question

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I'd cash out the pension and set up your own annuity. When either of you die the other gets 100%. That's what I did when I retired 4 years ago. My financial advisor recommended an Athene product and it's working out well.
 
Is your house paid for? If not, and if a lump sum withdrawal will pay it off, you'll be way ahead of the game to eliminate your mortgage....If she's got a 401K, most often there's a penalty to pay if she withdraws under the age of 59-1/2. That may or may not apply to other types of "pensions"....Lot's of folks won't pull out retirement money because they don't want to pay the tax. Well guess what, they'll have to pay it sooner or later anyway, so better now that after the tax rate goes up and/or more inflation sets in....As a matter of fact, myself, I'd pay off any kind of loan I had which involves compounded interest. Odds are that the interest you owe is outrunning whatever interest is accumulating on her retirement....Plus, there's always a chance that her old retirement can simply disappear into thin air. That's the thing about paper instruments. Any of them are little more than a "promise to pay" which in turn means that that all have some sort of counter-party risk attached......

......Lot's of stuff to consider, so put a pencil to it and measure twice before you cut it once...Good luck to ya.

DGW
 
I'd cash out the pension and set up your own annuity. When either of you die the other gets 100%. That's what I did when I retired 4 years ago. My financial advisor recommended an Athene product and it's working out well.
Be very careful when buying annuities. "There are no free rides sonny boy" Being risk adverse can put you in a worse situation then believing you are safe.
Remember most "Financial Advisors" are salespeople. You are the only one with a 100% interest in you.


 
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Kevin, I gotta ask; since your wife is an accountant, and probably VERY knowledgeable about things financial, why are you even asking this question? Would she not be the person to go to????
p.s. I've never trusted the advice of anyone, especially professional "financial advisors". I always felt that if they were so damn smart,
WHY ARE THEY STILL WORKING FOR A LIVING.... :p
p.p.s. When you check on the LUMP SUM amount she will be getting TODAY, you might find that it is NOT what you've calculated (mathematically). Regardless, I'd take the money and roll it over into a 401-K (because it IS eligible for that transaction at this point in time)..... but SHE already knows that..!!!
J.
Accountants know numbers and laws but not necessarily investments. Depends on their specialty. But yes I would trust her over a FA.
 
Personally not a fan of annuities either. Lots of loopholes not in your favor.

I let my guy talk me into one for a short term. Amazingly professionals can get them with short term no fee early exits (5 or 6 yrs, that was the only reason I did get it) It was only a small portion dedicated to 5 years down the road. At the time it was a very good rate for money not deemed long term. A year and half later the mere 2.2% was getting eclipsed by 5% almost anywhere. Very frustrating watch it sit at near idle while everything else was going 100 mph.
 
Been there, done that. As a matter of fact, it was 12 years for me as well. I'll tell you what I did, but I won't tell you what you should do, except to get an advisor.

My goal has always been preservation of principal. I realize that by being conservative I lost out on potential gains, but on the other hand I didn't lose a dime.

My first thought was also about company survival. We had just come out of bankruptcy and the market was improving. Truthfully, the CEO was masterful and the judge screwed the creditors. Anyway, good for us. My Grandpa completely lost his pension when the company got sold, but that was 70 years ago. I believe that pensions now have to be guaranteed with a pension account, so that companies cannot default. But, that's where an employment lawyer comes in.

I personally did not like the idea of taking the money while I'm still working. As long as there is cash flow (a good job) extra money isn't really needed. Save it for when you are retired.

Rolling it over is a crap shoot. In an account earning interest, will the amount double in 12 years? How will the interest rates vary over that time? Will the monthly payout still be $4K/month. Nobody knows.

I also have 2 financial advisors. I only told each one about half of my investable assets. I listened to them both, but did what "I" wanted I gave each of them a single account to manage.

Lots of naysayers about annuities. IMHO, the best thing since sliced bread. I have 2 of them. Both have a guaranteed 7% interest - for life. One came from an IRA, and the other a 401K. After they had been in effect for a couple of years, I took the "income for life" provision. They grow by 7% each year, and I take out 7% on a monthly basis. Both are with one of the largest financial institutions in the nation. I suppose they can go belly up - that's a chance I am willing to take.

Retirement is about cash flow. If you have to take money out of the bank for monthly expenses your planning didn't work out. MY plan was made at age 59. I calculated when I could afford to retire. Actually, my numbers turned out to be wrong. I was very successful in my later years and thus my Social Security was higher than I expected. Now, with SS, 2 annuities and a pension, I have a surplus every month.
 
Kevin, I gotta ask; since your wife is an accountant, and probably VERY knowledgeable about things financial, why are you even asking this question? Would she not be the person to go to????
p.s. I've never trusted the advice of anyone, especially professional "financial advisors". I always felt that if they were so damn smart,
WHY ARE THEY STILL WORKING FOR A LIVING.... :p
p.p.s. When you check on the LUMP SUM amount she will be getting TODAY, you might find that it is NOT what you've calculated (mathematically). Regardless, I'd take the money and roll it over into a 401-K (because it IS eligible for that transaction at this point in time)..... but SHE already knows that..!!!
J.
Good point, yes she is actually a financial genius. BUT! She isn't retired, I asked here because you guys have "been there done that." Ya know? I am most curious about what you guys have done that worked and what hasn't worked. It's one thing to understand how different financial tools work and another thing to have actually lived with them and retired using the different methods of how to save money etc. ya know?

Her old job, she was a senior partner at PriceWaterhouseCoopers. The pension was from back in the day when PriceWaterhouse merged with Coopers Lybrant (spelling?) She started with Coopers.

And when I say the culture changed, it really did use to be family where everyone helped each other. Today it's more of a corporation. And the old, now retired, partners she worked with were extremely mad that she was asked to leave. Nothing like that happened back then.

Our house and cars are paid for. Which is mostly why we don't need the extra $2,000 per month.

And to everyone! Thank you. Believe me, all of the input is being read and considered. It's all very good!

@roylt We use Schwab and Fidelity. I know what you means about Edward Jones. I used them back in the day and my experience was exactly the same. But the rules have changed since then too. Like being able to invest on your own, or fractional shares, like at Robinhood (which I don't use at all!) But you're right, it's easier now to take charge of your own money.
 
I skimmed through this pretty quickly, but the one input I never saw was the payout. If the 2000 and 4000 are known, the lump sum is the most important input.
 
I skimmed through this pretty quickly, but the one input I never saw was the payout. If the 2000 and 4000 are known, the lump sum is the most important input.
Oh, interestingly enough, @pisgah calculated it almost perfectly. It's right at 400,000. But it would not have been double in the 12 years. Close but not quite. I said double just to make it shorter and clearer.
 
Ahhh cool. If you have a competent Financial Planner, I'm betting they'll side with the majority on her taking possession now. I wouldn't argue with either.
 
I hate financial planners. If what they tell you turns out to be wrong, it's no skin off their posterior. Personally, my concern is having a trouble-free retirement with enough cash flow for any foreseen problem. The planner's objective is usually to maximize profits, because their profit depends on it. The best approach is to be conservative.
 
Conservative is THE best alternative (and probably the least used one).
Besides.... how much do you think you need to live on when you pass 90...? Just enough for med. ins. premiums and you're home free (sorta) ...:rolleyes:

J.
 
Conservative is THE best alternative (and probably the least used one).
Besides.... how much do you think you need to live on when you pass 90...? Just enough for med. ins. premiums and you're home free (sorta) ...:rolleyes:

J.
My dad is 92 this year, it's kind of funny, he would love a self driving car, where he can get in and say, "take me to the zoo." And then just sit back and drink some coffee.

But he also takes it pretty risky in the stock market. He bought a lot of Nvidia last year. I try to give him advice on the stock market. So I guess he isn't very conservative.
 
When I retired I looked into options for my 401(k) money, and found that an annuity was a very poor choice for me. The amount that I would receive was too low, so I just went to a financial investment firm, a fiduciary, and have done much much better. I pay a fixed percentage, 1.25% of the total annually, and there are no other fees or charges. In the 11 years that I have been retired I have drawn out much more than I had anticipated, but because the money was wisely invested (apparently) my balance is higher than it would ever have been had I been investing on my own. I actually have no idea about the various funds that my money is in, I only look at the total value of my account. Over these 11 years I am very glad that most of my funds (70%) are in equities, and only 30% in bonds or other investment types. Past performance is no guarantee of future performance, but I feel relatively comfortable for my remaining years.

I suggest avoiding using a traditional broker, who gets a fee everytime he makes a trade in your name. Those brokers are working for themselves, not for you.
 
What I suggest is take the lump sum. If you start taking disbursements now the amount remains the same in today's dollars. It is inevitable that its value will decrease overtime as cost of living increases. I took an early retirement on one of my pensions at age 62. I calculated the amount against waiting another 4 years and receive higher amount. It would be when I am 72 that the total amount would be equal. This one is no big deal for me. So calculate the differences.
The other factor is the risk factor of the company existence and what type of retirement funds are protected should the company go casters up, DRT. Dead right there. Mine will be here probably forever. So that was no risk factor.
The one I would chose after you do calcs as lump sums are usually less in the long run, and way your difference. I would invest the lump sum and let it grow for the next 15 years. Let a large investment and money management firm with a good reputation handle a lump sum investment. It uncomplicates things however here is my take. Piece of mind I don't have to think about it. Yes you pay a fee. But if they don't make you and all their clients money they are not in business.
I did a little experiment of my own the last 8 Years 4 with Trump and 4 under Biden. Took a small amount of money in an investment account left all option percentages the same as far as high, medium, low risk and bank safe and let it self manage . Simple math... Trump = Gain. Biden = LOSS . That loss was great enough that it negated the gains under Trump and actually imploded. So this is bullshit to me that Bidenomics benefitted me. I couldn't stomach the speech last night and had to turn it to a different channel.
 
A friend of mine from work was retiring a couple years before I did, actually it should have been many before I retired, but I got out early, did this.

He went to EVERY "rubber chicken" dinner offer he got. He used them for learning what was out there and and any other details he could glean to use for himself At the end when they hit you up to handle your money he always gave this offer. "I will give you $25,000 to invest and I will separate $25,000 into a different account I will control. At 6 months we will compare. If you do better we'll talk about the rest of my account. If you don't, I'll take it back and we'll part ways." He never had one take up his offer.

I didn't fully do what he did, but I hit a few of the rubber chicken dinners until I got tired of the excessive mail that came with them.
 

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