Pension Question

[GypsmJim]

Sounds like your company and 401k custodian were working together to make coin off of you. Have you looked into if they violated any federal laws?

No I did not. I moved along quickly. I had been a consulting engineer for 45 years and the few months I was there hurt my reputation with local contractors. I spent a year telling people that I quit because they were crooks.

When I finally got my money I simply chalked it up to not working with ******* again.

 

[Ranger]

OP: I had a lengthy response planned out in my head and then read the additional info you provided about your wife and her job. This is the perfect opportunity and situation to say "Whatever you think dear".

 

[crstrode]

So I have a pension question. I know I ask a lot about money for retirement, but it's pretty confusing.

So my wife is starting a new job, next week actually. Yippie! Without going into a lot of details, she was high up in her last job, and when they elected a new president for the company, she was asked to leave. Yes she was friends with the outgoing president. And yes, many of his other supporters have also left. She did not vote for the new guy either…

Just as an aside, she worked there for 20 years and definitely wasn't the same culture as when she started. What a shame.

Anyway, she did find a much better job so it all works out in the end.

Her last day was December 31 and she just found out today she has a pension.

So here's my question: Should she take the payout all at once? Or should she take the monthly payments forever. If she dies, I would get half.

Now if she waits for 12 years which is when she would have retired had she stayed…and let the company manage the money both amounts would approximately double.

She's 49 years old. The monthly amount today would be right at $2,000 per month. Or $4,000 in 12 years.

For me to be eligible for the half if she buys the farm is $20 less per month. Or $40 less per month and I would get 75%.

Let's just say she's worth keeping.

I hope this makes sense, I tried to make it as short as possible.

Any thoughts? We don't need the money for rent and she won't let me buy a new Ruger each month, so it will just go into an IRA account.

I mean no offense, however asking a question like this (especially here) means you are ill equipped to make the right move on your own. Find an experienced financial advisor.

 

[JackBull]

I mean no offense, however asking a question like this (especially here) means you are ill equipped to make the right move on your own. Find an experienced financial advisor.

Those are they types that especially should stay away from a FA. The OP would be at their mercy. Time to put their big boy pants on and learn about finances.

 

[Dan in MI]

Maybe the OP has a pretty good handle on the situation but is fishing for ideas and opportunities he is not aware of?

Just because he’s asking doesn’t mean he is following what is suggested.

Much like automotive, medical, legal and a host of other questions. Fishing for ideas across a broad spectrum of opinions isn’t a bad idea. Now following these ideas without follow up research is a different story.

 

[Klondike Mike]

FYI most annuities are guaranteed only until they are not. Read the fine print.

Pension plans are annuities only you don't control them your employer does. So you have to ask yourself who you trust more a paid advisor or your employer?

 

[JackBull]

I wont pay a salesman, I mean advisor, to sell me what I can buy on my own.

 

[Hertervillian]

Who would have ever thought a coal fired generating station would be shuttered, let alone every single one of them. A pension tied to that went away for all intents and purposes.

Nothing is sacred. I feel like a person can invest that same dollar just as well as the company can.

 

[Fox Mike]

My feelings would be 'take the money and run' They no longer want her so I really wouldn't want them holding her money. Your banker can point you in the proper way to manage it.

 

[Kevin]

Again, this thread has been eye opening. Thank you to everyone who commented. And yeah, as @Dan in MI pointed out, I did have some ideas and was sort of fishing, looking for perhaps something either I or my wife hadn’t thought of.

As far as financial advisors go, Schwab has one, but they charge a 1% fee per year. That can add up to some serious fees.

I just read a news story about this couple in Minnesota I believe. They won a lottery and got $60 million after taxes.

Well the financial advisors they hired from Des Moines Iowa invested in annuities and within something like 10 years ate up their fortune in transaction fees. Now there is a huge legal battle going on.

 

[Johnnu2]

Like my buddy the VP for major investment house used to say: "My job is to invest your money until there is nothing left".

J.

 

[GypsmJim]

As an aside, a few years ago I was conflicted about what to do with a 401K. My planning has worked out well, in that my cash flow covers all my expenses, and I even have a surplus every month.

I ended up cashing it in and investing in SeaRay and Cadillac. Turns out I have no cash left and my investment is depreciation every month.

I really don't worry, though, and they sure look pretty parked in my garage.

 

[jav]

Do you have a person or company that takes care of your money ?

 

[vito]

Working with a "financial advisor" who charges you for every financial transaction is, it seems to me, a losing proposition. That advisor is then motivated to trade, trade and make more trades so as to generate more fees for himself. Working with a fiduciary, where you pay 1% or like I do, 1.125% with a minimum annual fee of $3,000 does add up, but all the transaction fees are paid by my fiduciary, and their fee to me only increases as the total value of my investment increases. I do not claim any personal expertise in investing, and using my fiduciary for the past almost 12 years has resulted in a net gain of about 7-8% a year. A lot better than putting my 401k in CD's and certainly better than having it in savings accounts at a bank.

 

[Johnnu2]

Do you have a person or company that takes care of your money ?

I CERTAINLY DO...... ME...and only ME..!!!
It's very important to me to live a stress free life.... so, no equities; ever....but my life-long spending has been very conservative (and I've never felt "denied". I just "need" less "things").

J.

 

[mexicanjoe911]

A Roth IRA is worth looking into. Municipal bonds!

 

[Dan in MI]

I think I said this before but when I retired I split my funds 50/50. The fiduciary runs 50% and I run 50%.

My side has made much more than his side, BUT, his side is set up for the long haul and as he calls it SWAN, Sleep, Well, At, Night. His is in a mix that he plays with all the time. The fee is 1% ish which I never even see come out. It has done very well and would cover the rest of my life. There are no other expenses, and I can visit any time to go over "The Plan." I have not touched a penny in that account since I gave it to him to run.

Yes, my side makes more money, BUT, my side is how I want it, balls to the wall go for it big. Took a big hit in Spring 2020, about 25% loss, made it all back plus by the end of the same year. Took another big hit (from a peak) in 2022 (thanks Joe) that still recovered in 2 years. (longest recovery time I've ever had) By raw numbers my 401 hasn't hardly moved since the day I retired, but when you add back in what I have lived on for 6 years plus the 200K I transferred out for risk aversion, I have more than doubled my retirement 401k value. My number one rule for retirement was my lifestyle would not change for the worse, minimum equal or better than while was working. Goal achieved for the better.

This graph is both accounts combined.

 

[Kevin]

I think I said this before but when I retired I split my funds 50/50. The fiduciary runs 50% and I run 50%.

My side has made much more than his side, BUT, his side is set up for the long haul and as he calls it SWAN, Sleep, Well, At, Night. His is in a mix that he plays with all the time. The fee is 1% ish which I never even see come out. It has done very well and would cover the rest of my life. There are no other expenses, and I can visit any time to go over "The Plan." I have not touched a penny in that account since I gave it to him to run.

Yes, my side makes more money, BUT, my side is how I want it, balls to the wall go for it big. Took a big hit in Spring 2020, about 25% loss, made it all back plus by the end of the same year. Took another big hit (from a peak) in 2022 (thanks Joe) that still recovered in 2 years. (longest recovery time I've ever had) By raw numbers my 401 hasn't hardly moved since the day I retired, but when you add back in what I have lived on for 6 years plus the 200K I transferred out for risk aversion, I have more than doubled my retirement 401k value. My number one rule for retirement was my lifestyle would not change for the worse, minimum equal or better than while was working. Goal achieved for the better.

This graph is both accounts combined.

View attachment 64393

Thanks for giving so much good info here.

My wife and I have the same ideas, our lifestyle can’t go downhill after we retire. We have a few plans and ideas. We certainly don’t want to buy a vineyard in Napa or anything like that. For some reason advertising always shows retired people in a winery or on a sailboat. But with everything we should be able to retire in 10 years.

 

[JackBull]

A Roth IRA is worth looking into. Municipal bonds!

Bonds wont keep up with inflation so you lose money. There are safer market investments, value funds for instance.

 

[JackBull]

I can agree and disagree with this post. IF a person has basic needs AND is willing to read diligently on new changes yearly, then NO, a financial planner is not a necessity.

However, if you have questions about wills and trusts, estate planning, Roth conversions, Charitable Trusts, or suffer from investment paralysis, then a professional who has access to all these services can be a bargain in the long term. Their fees are generally around 1% taken quarterly. The government has made all of this much more confusing and difficult than it needs to be. As an example, I am nearing 71 and getting ready for AMD's at age 73. Few people know that you can actually begin to minimize tax liabilities earlier than with a Charitable Trust. The majority of our giving goes through this account. It takes time to set up, an expertise I did not have.

Just log onto Bogleheads and learn it yourself, for free.