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Old 10-10-2016, 12:34 PM
 
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I'm also planning to top my brackets, from age 65 to 70 -- when I'll only be living off my pension and in the 15% tax bracket. But that also 9 years away so who knows -- with current choices we're facing (and that's all I'll say about that) -- what the tax situation could be by that time.

But I'm only in the 25% bracket now -- and that's the same bracket I'd been in after my RMD's and age 70 SS kicks in so I still have more exact calculations to do -- actually also accounting for tax deductions that will reduce AGI/MAGI -- as that time draws closer -- to see if the "topping off" is worth it.

Not that every dollar isn't a dollar, but I hate moving money and complicating matters just to "save" minimal amounts.
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Old 10-10-2016, 05:59 PM
 
Location: Columbia SC
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Quote:
Originally Posted by selhars View Post
I'm also planning to top my brackets, from age 65 to 70 -- when I'll only be living off my pension and in the 15% tax bracket. But that also 9 years away so who knows -- with current choices we're facing (and that's all I'll say about that) -- what the tax situation could be by that time.

But I'm only in the 25% bracket now -- and that's the same bracket I'd been in after my RMD's and age 70 SS kicks in so I still have more exact calculations to do -- actually also accounting for tax deductions that will reduce AGI/MAGI -- as that time draws closer -- to see if the "topping off" is worth it.

Not that every dollar isn't a dollar, but I hate moving money and complicating matters just to "save" minimal amounts.
Well said and the situations can change quickly.
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Old 10-11-2016, 08:59 AM
 
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Originally Posted by Stratman View Post
You're off a bit. $350x360 months (30 years) is only $126,000. If the lump was 1.26M, it would be a no-brainer.
Right! Not sure where the 1.26 million was coming from.

I just looked at my little pension. Its split into two parts because they changed it mid-stream.

Anyways, one part (the smaller part) has a buyout at 65 which they give me a value for. $45,000 lump, or $250 per month (roughly) I would need to collect the monthly option 15 years to break even. Since my wife is younger than me by 7 years (maybe that plays into it??), there is a probability that it could go out 20-25 years if I collect the 75% option. So the buyout is a nice little chunk up front, but we lose in the end when it could be $75000 in the long run .

Last edited by dbsteel; 10-11-2016 at 09:22 AM..
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Old 10-12-2016, 06:49 PM
 
Location: North West Arkansas (zone 6b)
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my wife just went through this. She ended up asking the pension folks for all kinds of information including what age their tables said she would live until, what her various pmt amounts would be at whatever age and using straight line math (ie no compounding interest) she determined that she would be better off waiting.

The pension folks certainly make it sound attractive and hope that by dangling that carrot that at least a few people will take the early distribution. They even offer a payout that stops when you become eligible for SS payments.

with a few weeks to go before the deadline, the company sent a reminder that she had to make a decision before it was too late.

It was touchy for a while, I thought my wife was going to take their bait and the lower payment but she made a careful decision and I'm glad.
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Old 10-12-2016, 07:44 PM
 
Location: Haiku
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Is that $350/month constant or adjusted for inflation? If it is constant and the buy-out is $100,000, I would take the buy-out. If it is inflation adjusted and the buyout is $120,000, the buyout starts looking attractive. I can invest 120k and get 3.5% out of it, which is $350/month. And I get to keep the principal. But there is risk in that and the pension is riskless, which is worth something.

Pensions have no time horizon which allows them to squeeze more return out the principal. I bet they will not offer anywhere close to 100k. But I am curious, if you choose to tell us, I'd like to know how they value it.
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