re: Pension Lump sum question

quote:

---

Age 60. Plan on retiring at 62-65 (prob 65) Left company and will be starting new position next week. Am considering taking lump sum pension pymt from old company and paying off mortgage.

---

Your LS pension payout should be significantly larger at age 65 compared to age 60.

Your payout will be reduced, likely for each month that you take it prior to normal retirement age under the plan (likely age 65).

The present value of your LS pension will also be affected by interest rates. With today's high interest rates, the present value of an amount that would otherwise be paid to you in 5 years will be relatively low compared to recent years when rates were lower. If you wait a few years for rates to (hopefully) come down a few points, the present value will be higher.

Your mortgage lender would love for you to pay off the loan if they're only getting 3.25% interest on your loan. Banks are paying at least 5.5% to borrow money from each other (Fed Funds rate). You're likely going to see your LS pension value increase by more than 3.25% per year for the next few years, so you're coming out ahead leaving the $ in the pension fund.