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What are you basing the 2700 on? SS estimates are based on you continuing to earn at least as much as you are earning now for all the years up until you file. If you are stopping work in May at 59 then you will not have that income from 59 - 70.
But I am not withdrawing the money from social security from 62-70 so it grows 8% a year.
Did you use some sort of Net Present Value calc or did you just add the amounts up? It looks to me that you may have done the latter but I just checked the first option. With a Net Present Value calc and assuming 3% inflation or a somewhat realistic estimation of inflation, one of the options that gives you the most money in the next few years could give you the highest Net Present Value. And assuming that the option fit in with your savings and SS plans, that would be the best option. You can also factor in your withdrawings from savings and loss of interest on that but the calcs would get complicated.
I assumed 26.7 years (ages 59 4 months to age 86). The results showed that Option 1 has the highest Present Value (PV) and is the best option at $520.5K, 462K, and 412.5K at inflation rates of 2, 3, and 4% respectively. Option 2 was second at $508.7K, 454.3K, and 408.4K respectively. Note that as inflation increased, Option 1 and 2 PVs got closer. Depending on how much extra you would plan to withdraw from savings with Option 1, Option 2 could still be a viable alternative if your savings is getting a high rate of return. (For Option 2, I calculated PV for $2807-1935= 872 for 2.7 years at different inflation rates; then similarly calculated the PV for $1935 for 26.7 years and added the two PVs).
If interested, you might want to run your own calculations to check my results.
ABQ2015,
Thank you so much for taking the time to run the numbers for me.
On the equity side of my investments I am doing well but fixed income is earning about 1%.
I am leaning toward option 1.
I will look at the numbers again.
Donna
A set amount of money per month for the rest of your life.
That's your allowance.
You don't know the future. You don't know how long you will live (you noted 86).
You don't know what inflation will bring.
My pension is my basis.
Haven't touched the 401K yet and SS is still nearly a decade away.
I do subbing/remedial work in schools which gives me some slush money and the occasional long term sub which funds my big projects.
I also have savings which I dip into when I need.
I also had various options when it was time to fill in the paperwork for my pension.
I chose the set amount for life.
Your mileage may vary. I told you my story but the final decision is really up to you.
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