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Ok. I'm 57 years old. Getting laid off with a severance package of 150k. Also have a pension what will be a life-time annuity of 34k per year (or I can take a lump sum payout of ? 500k?) I also currently have 185k in a 401k. My house here in NJ has been recently valued by a real estate agent to be between 750k t0 780k. Those are my assets. As far as debt, I have a total debt of 275k. So, seeking advice on what to do? I was thinking of selling my home and moving to Florida. Based on my assets, after paying off my debt (from the sale of my current home). Can I retire in Florida? I mean, in a reasonably nice home, in a good area. Can it be done? Maybe I can find some part time work in FLA to supplement?
Considerations, at least a couple that come to mind - not claiming this is a complete list:
1. If you take the lump sum, you would have to have confidence in your own ability to manage money. Are you the type who would be tempted to blow a lot of it right away? Are you the type to invest most of it wisely? What is your assessment of your own financial self-discipline? (Please note I am not suggesting it is not good.)
2. If you take the pension, you would have to have confidence in the company or government agency which is providing it. Will that company still be around in 10 or 20 years? Can you count on them not to go bankrupt? If they are bought out by another company, would the new company honor the pension obligations?
3. This issue has been raised and discussed in the Economics Forum of City-Data, where you might want to look for the thread if you desire additional reading and comments in addition to what you receive here. I would look first in the Personal Finance sub-forum of the Economics Forum, then in the main forum itself. You'll have to scroll down through the somewhat older threads or use the search function.
Thanks, Escort Rider. I am confident in the company not going under -- JP Morgan Chase. The odds are very good that they should be able to deliver the pension throughout my lifetime. When i was younger, I would have no hesitation to take high risk investments since there would be time to recover. Now, at 57 -- recovery time from a bad investment is high risk; therefore, I am leaning against the lump sum payout. I do have immediate cash available with the 150k severance -- ideally, it would be great if I could not touch that while uprooting and moving...but, living in NJ with NJ expesnse being what they are, I will more than likey have to at least take a third of that over the course of a year if I remain unemployed.
I am confused if your being laid off or force to retire since your getting a pension and a severance or bonus for retire early. Whatever you need to seek tax advise form someone like a CPA because of issues that could greatly effect the money retained. For instance if you could take the severance on Jan 1 that would put it next years tax rate. You need advise not really available on a forum totally. Certainly you could retire to some where I Florida just depends on the place and lifestyle really
Take the money and run
Sell the house and settle the debt... 750-275 = $475,000
That plus $500,000 (and the 401K balance) leaves you deep in the "sitting pretty" column.
(Yeah, there are nicer columns... oh well.)
Move to a lower cost of living area (sure, FL would be fine).
Find *something* to do that will provide HI and the $2000 per month in basic living expenses
you'll need (rent, utilities, groceries) and you can keep the better than $1M invested; even for growth.
You'll want/need to stay busy anyway... may as well work and absent that HI is crazy high..
If/when you have a stock split or some other uncommon gain... buy a car or do something fun.
If/when you find a better way to earn more than $2000 a month... then you can travel too.
If/when your $1M investment pool can also produce comfortable income too... you're golden.
If you aren't married.... find a nice widow or divorcee with a house.
Well 34K per year is not a bad base to start with as a pension. I'd go with the annuity payout.
Yeah..JPM isn't about to go belly up anytime soon. If anything they will be the last man standing
It's going to be a bad tax year for you with that lump sum payout and if you sell the house.
You might want to get hit with the severance payout this year and sell the house so it closes early next year.
Moving to a lower COL state and not having big debt (mtg/car loan) will make that 34K a year go a lot further.
I would rent before buying anything and scope it out and then buy for cash so no mortgage.
I wouldn't touch the 401K until you need it.
For extra money you can do substitute teaching in the local schools unless you want to find something more permanent.
You'd have 9 years (give or take) before SS kicks in.
Really depends on your lifestyle..simple or extravagant as to how poor you may feel.
That's my 2 cents but remember..I'm not you.
Oh and texdav..there were folks at my old job that got layed off. They were retirement eligible so officially they retired and got to stay until the end of the month and they also got the severance. More like a forced retirement.
In fact I'm going to a retirement lunch next week for someone who got layed off but is retirement eligible.
Ok. I'm 57 years old. Getting laid off with a severance package of 150k. Also have a pension what will be a life-time annuity of 34k per year (or I can take a lump sum payout of ? 500k?) I also currently have 185k in a 401k. My house here in NJ has been recently valued by a real estate agent to be between 750k t0 780k. Those are my assets. As far as debt, I have a total debt of 275k. So, seeking advice on what to do? I was thinking of selling my home and moving to Florida. Based on my assets, after paying off my debt (from the sale of my current home). Can I retire in Florida? I mean, in a reasonably nice home, in a good area. Can it be done? Maybe I can find some part time work in FLA to supplement?
Take the 34k every month, outside investments too risky
Leave the 401k where it is or move it to Vanguard.
Sell the house but you may owe capital gains tax on the profit.
Is the 150k severance being paid to you in 2013? If so you will owe Federal and NJ tax on it
at a higher rate.
Move to Florida or another no tax state but it not likely you will find work that pays much.
Forget getting medical benefits. In October apply for Obamacare for 2014.
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