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Started By
Message
re: Pension Decisions
Posted on 7/19/25 at 9:04 am to Artificial Ignorance
Posted on 7/19/25 at 9:04 am to Artificial Ignorance
How do you know jody won’t turn that pension into a bass boat once you kick the bucket?
0
Posted on 7/19/25 at 9:36 am to Artificial Ignorance
Nobody can give reliable advice without knowing the rest of your financial picture.
We recently went thru a similar decision with wife's pension. It was relatively small compared to our assets. We took lump sum and combined with some other money to buy a lake house as a 2nd home. The lakehouse is in a desirable location and has grown almost $200k in value in the 2 years we have owned it. No regrets.
We recently went thru a similar decision with wife's pension. It was relatively small compared to our assets. We took lump sum and combined with some other money to buy a lake house as a 2nd home. The lakehouse is in a desirable location and has grown almost $200k in value in the 2 years we have owned it. No regrets.
Posted on 7/19/25 at 10:41 am to soccerfüt
quote:
OP: Take the haircut to guarantee your wife has the 100% and take the money as soon as you absolutely need to begin taking it, not want to start taking it.
How can anyone give any advice without the actual numbers?
Posted on 7/19/25 at 11:00 am to Artificial Ignorance
quote:I'm surprised, because every pension calculation I have ever done shows a miserable rate of return relative to the market.
Not gonna happen. Did IRR calc on it
Posted on 7/19/25 at 11:34 am to slackster
quote:It really doesn’t matter if the pension is (at 100%) $1,000 or $10,000 per month.
How can anyone give any advice without the actual numbers?
I imagine it’s much closer to the lower number, hence the potential appreciation would mean more to his widow.
You are conceptually correct: complete transparency is optimal for any retirement advice (advise in some quarters).
Posted on 7/19/25 at 4:53 pm to soccerfüt
quote:
If you are forced to retire before 60, it’s nice to have even the diminished value of the pension there.
Thank you! Helpful.
It’s my choice to retire at 55. I have had enough of the corporate world.
Crossed off final retirement financial benefit when made 30yrs a few wks ago that keeps same health insurance cost contribution by company (80%).
Have planned to leave at this age and on my own terms. Blessed to be able to.
Made pact with myself moons ago to
Posted on 7/19/25 at 5:44 pm to soccerfüt
quote:
It really doesn’t matter if the pension is (at 100%) $1,000 or $10,000 per month.
I hear the point on the details. I am seeking insights on risks, ideas I am not thinking about, watch outs, etc. Getting that here and most appreciate it!
Did not think it appropriate to seek that level of detailed financial advice here for free. I recognize the limitations. Broad conceptual feedback is appreciated nonetheless.
quote:
I imagine it’s much closer to the lower number, hence the potential appreciation would mean more to his widow.
Wrapping it at 30yrs in big oil in top 3% of company salary grade. Blessed! Not the lower end.
Deferred accounts provide same lifestyle as today within 4% rule until death do us part and at P90 Monte Carlo scenarios.
Large lump sum will be hitting the high end of 2026 tax tables. Lump sum will provide 3-4 yrs of retirement expenses.
Original plan on pension was to take at 65yo until I learned it is penalty free at 60yo. PV calc at 56yo is nagging at me although staring at significant RMDs at 75yo. So, Optimizing lump sum for max RMD reduction and pension timing. The 100% JT survivorship decision is all but taken.
Posted on 7/19/25 at 6:48 pm to Artificial Ignorance
If it’s a considerable amount of money, that lump sum should be at least considered. It’s your family money for life then, once you and your wife pass the pension asset stays with the company. Just something to think about.
Generally speaking, these things come down to personal risk tolerance. Companies are very good at understanding that most people prefer the guarantee even if it’s lower over a risk for more money.
Generally speaking, these things come down to personal risk tolerance. Companies are very good at understanding that most people prefer the guarantee even if it’s lower over a risk for more money.
Posted on 7/19/25 at 8:11 pm to RoyalWe
quote:
I'm surprised, because every pension calculation I have ever done shows a miserable rate of return relative to the market.
Nothing should be surprising because he’s just making up numbers for his own purpose.
Posted on 7/20/25 at 1:41 am to baldona
To be clear, the pension IRR is 4%. To your point, can beat that in market. My mindset was to keep pension as annuity to cover nearly 100% of essential expenses (peace of mind).
Presume you mean to take pension as lump sum and rollover to traditional IRA?
Lump sum and asset ownership are very good points that will rethink. Much appreciated.
Presume you mean to take pension as lump sum and rollover to traditional IRA?
Lump sum and asset ownership are very good points that will rethink. Much appreciated.
This post was edited on 7/21/25 at 12:19 am
Posted on 7/20/25 at 9:15 pm to Artificial Ignorance
What discount rate are you using for the PV of taking now vs later?
Posted on 7/20/25 at 11:34 pm to slackster
quote:
What discount rate are you using for the PV of taking now vs later?
5%
Now beats Later until 35-ish years
This post was edited on 7/21/25 at 1:14 am
Posted on 7/21/25 at 7:31 am to Artificial Ignorance
Your rates of return are very low which is skewing the math. You’re rejecting the lump sum pension at a 4% IRR but discounting drawing early at 5%. It’s illogical.
Posted on 7/21/25 at 8:09 am to Artificial Ignorance
quote:Your annuity won't be able to compensate for inflation. Taking the lump sum allows you to do so.
My mindset was to keep pension as annuity to cover nearly 100% of essential expenses (peace of mind).
FYI, they're taking your money and investing it in the market when you buy an annuity.
Posted on 7/21/25 at 8:22 am to RoyalWe
quote:
I'm surprised, because every pension calculation I have ever done shows a miserable rate of return relative to the market.
I have a pension, and income annuities, and since I am 65, I do ROR relative to fairly safe bonds. I just did a similar comparison to the one that you mentioned, and my microwave is better than my color printer.
In any conversation around guaranteed income, I would consider vulnerability of financial exploitation from outside and from family, whether your spouse, when in their 80s, wants the responsibility of managing money, etc.
I have a slight majority of my money is in equities, but I am happy to have some money that's missing the boat. Not advocating for everyone.
Posted on 7/21/25 at 9:05 am to Bdiddy
quote:Hey, I get it. Personal finance is personal for a reason. There's the dollars-and-cents analysis and the peace-of-mind / risk tolerance / other considerations side. No one has to justify to others how they use their money -- they just need to be able to justify it to themselves.
I am happy to have some money that's missing the boat. Not advocating for everyone.
Posted on 7/21/25 at 11:03 am to RoyalWe
Have taken decision to take lump sum.
I get your good point.
I get your good point.
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