Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
My DH took part of his pension out as a lump sum and invested it. We still do receive monthly payments, which would stop in the event he predeceases me.
I think if you are not an avid and successful investor, you should take the monthly payout, unless there is something else I don't know about your situation.
If your company goes bankrupt that should not affect your pension since your are fully funded.
If a company is on the verge of bankruptcy they will likely forego payments to the pension program in a last ditch effort to try to avoid bankruptcy. But more importantly, make sure it is a true pension that is insured by the PBGC and not some other plan that looks like a pension.
I have heard employees and employers talk about their 'pension plan' when in reality they have a 401(k) plan with no employer match/contribution! Everything that pays you money in retirement is not a true pension.
Annuities are now a popular way for employers to avoid the federal regulations associated with pension plans. If your employer offers annuities as the 'pension', is your annuity separate from everyone else's, or is it one huge combined pool? Is the plan fully paid up front, or do they make periodic payments (payments that could cease during economic distress) to an insurance company to fund these annuities? What guarantees that your monthly check will not decrease or be cancelled in the future?
With the current low interest rates, $900k would be a huge addition to an IRA, that you could roll over in to a Roth during the years you had low taxable income before you collected SS. If my employer offered the lump sum, I'd likely take it and a portion to delay SS until 70, in essence buying a COLA adjusted annuity of $22k, for a SS check equal to $53k in IRA withdrawals. It really depends on how much your FRA SS is predicted to be, & have in IRA & 401K & Roth now. I would NEVER buy a commercial annuity if I hadn't already maxed out my SS by delaying until 70. The cost vs payback of collecting SS at 70 dwarfs any annuity in value by far. Even if you are maxed out in SS benefits ($24k at 62), delaying to 70 would only cost you about $200k from 72, or $120k from 66. I typically would always recommend to keep the monthly pension, but for a lump sum that large, I would be sorely tempted to take it.
You have one major difference between yourself and many posters. As I understand it, you are single with no heirs so you only have to consider yourself. I am in a similar position. As the song says, It is all about me.
Many poster's make or have made their decisions needing to worry about others versus just themselves so much of their advice probably does not best fit your situation.
Enjoy it. I do, especially the not having to worry or plan for others.
Nice problem to have. I had similar scenario and took the monthly payout. Reason is my lump sum is much smaller than yours and it's a very small part of my net worth. It's a nice to have but not essential for survival. However if I had a large lump sum, I might make a different decision because I have heirs. I already have to worry about how to invest my money from 401k and IRA, so one less pile of money to worry is basically my decision.
I have heard horror stories that an executive COULD, with stroke of a pen, do away with pension--doubt it, but my question is if I retire and decide to take monthly payouts, am I guaranteed that payout for life once I have retired and the first payment has already started???...others have mentioned there is or should be a pension insurance in that case....is the monthly payout a bird in the hand, as the lump sum would be??
It is my understanding the Pension Benefit Guarantee Insurance is for private pensions. Also from my reading it does not cover union pensions or state pensions.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
