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Author: ed6713 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19483  
Subject: Decisions, Decisions Date: 12/16/1999 7:36 PM
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Retiring on 01/03/2000 assuming the world is still revolving, there is not a mass uprising like my survivalist neighbor is preparing for, good Lord willing & the creek don't rise. At a young 56.
What a selection of decisions to make. The biggest is to take the comfort of the monthly retirement check with the 100% survivorship feature for my wife or take the $$$ and do it myself. She wants the assurance of the guaranteed monthly check for the obvious reasons. On the other hand, the interest rare the retirement fund is using is a paltry 6.04%.
What's a guy to do?? Give it a try and risk the "I told you so" or go with the security?????
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Author: N540JB Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 939 of 19483
Subject: Re: Decisions, Decisions Date: 12/16/1999 8:17 PM
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ed6713
I faced the same decision over 6 1/2 yrs ago (age 54 at the time). The reduction in annual benefits was too great for the 100% option. But I also had the option to select a 5 or 10 yr certain at 100% plus several others. I chose the 5yr certain option and have been diligent with other investiments and because of the ongoing bull mkt we are better off today. I felt that if I could make it to 62+ SSN would kick in as inflation hedge and then at 72ish IRA $ could be tapped. At the present time the wife will no longer receive my pension but with me out of the way and us free and clear of all debt she can very comfortably survive on what assets we have accumulated. This plan seems to be working for us. Its a little scary at first but is it great one you take the step. I don't honestly know how I ever had time to work.
John

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Author: rjm1 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 940 of 19483
Subject: Re: Decisions, Decisions Date: 12/16/1999 8:34 PM
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Retiring on 01/03/2000 assuming the world is still revolving, there is not a mass uprising like my survivalist neighbor is
preparing for, good Lord willing & the creek don't rise. At a young 56.
What a selection of decisions to make. The biggest is to take the comfort of the monthly retirement check with the
100% survivorship feature for my wife or take the $$$ and do it myself. She wants the assurance of the guaranteed
monthly check for the obvious reasons. On the other hand, the interest rare the retirement fund is using is a paltry
6.04%.
What's a guy to do?? Give it a try and risk the "I told you so" or go with the security?????


Do the payments increase over the years as inflation cust your purchasing power? If not, then take the cash.
You should be able to get a better return out of the market.

Since this is an important decision hire a fee only planner or go to a CPA for some advice.

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Author: ibnana Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 945 of 19483
Subject: Re: Decisions, Decisions Date: 12/16/1999 10:46 PM
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Do the payments increase over the years as inflation cust your purchasing power? If not, then take the cash.
You should be able to get a better return out of the market.


I agree with rjm1. When my husbnd retired a year ago, we did not have the option to take a lump sum. He will receive the same amount forever since it is not inflation indexed. Assuming we live another 10+ years, those monthly payments will buy a lot less!

We did take his 401K in a lump sum instead of rolling it into an IRA.

We also opted for the 100% survivorship. I recently realized that my husband is worth more to me dead than alive, since if he were to die first, I would receive his SS payments (I now receive half his amount; I have been a parasite for 40 odd years).

We have both survived the first year of retirement and are still speaking to each other. It's a miracle!

Carol.....occasionally though I do think about what he's worth to me!



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Author: TheBadger Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 946 of 19483
Subject: Re: Decisions, Decisions Date: 12/16/1999 11:15 PM
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How did you decide that they are using 6% --- actually that is quite high & may have built in mortality assumptions. The true test is to do the math yourself, e.g. the periodic payment in one hand and the lump sum offered in the other. As an example; if monthly benefit * 12 / lump sum = 6%; then, at a minimum, you should be able to take the lumpsum & direftly transfer it to SunAmerica / Aetna / NWMutual / etc. & achieve a better periodic benefit; or you could take the lump sum; rollover to an IRA, take part and buy an immediate annuity & take the other part & venture into the murly realms of investing on your own.

TheBadger


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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 954 of 19483
Subject: Re: Decisions, Decisions Date: 12/17/1999 11:07 AM
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Greetings, ed6713, and welcome. You asked:

<<Retiring on 01/03/2000 assuming the world is still revolving, there is not a mass uprising like my survivalist neighbor is preparing for, good Lord willing & the creek don't rise. At a young 56.
What a selection of decisions to make. The biggest is to take the comfort of the monthly retirement check with the 100% survivorship feature for my wife or take the $$$ and do it myself. She wants the assurance of the guaranteed monthly check for the obvious reasons. On the other hand, the interest rare the retirement fund is using is a paltry 6.04%.
What's a guy to do?? Give it a try and risk the "I told you so" or go with the security?????>>


First, understand fully the options available to you, and what each means to your (and her) peace of mind. Each has its advantages and disadvantages, so you must weigh that choice carefully. You're both young, so a fixed annuity payment may be great for peace of mind, but looks pretty bad twenty years from now after inflation has taken its toll on purchasing power. For some ideas on deciding on how to take your pension plan, see the first article in out new Managing Your Retirement area. Get there by clicking on the Retirement tab at the top of most screens within Fooldom.

Regards..Pixy

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Author: ed6713 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 965 of 19483
Subject: Re: Decisions, Decisions Date: 12/17/1999 4:59 PM
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PENTEGRA who administers the retirement sent me a copy of their calculations that show the interest rate they used.
Thanks for your post.


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Author: ed6713 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 966 of 19483
Subject: Re: Decisions, Decisions Date: 12/17/1999 5:12 PM
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Thanks for the post. We have looked at the many, many issues involved until we're about worn out. My goodness, what a bunch of stuff to decide. I'm leaning towards the cash but my wife still feels pretty strong about the total, risk free comfort of the monthly check. My father was thoughtful enough to set up his two retirement checks like that and my Mother is doing quite well.
Inflation is the only real bummer. I'm 56. The COLA feature doesn't kick in until I'mm 66 so the check will lose about 40% of it's value IF inflation only averages 4%. Remember the years of double digit inflation??
We're still thinking. Luckily we have other assets to rely on in addition to this. If in doubt, I'll go with my wife on this one. It means a lot to her peace of mind, inflation or not. All you old married folks realize that sometimes hard facts & data don't carry the day.
(*_*)
V

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Author: jfschutz Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 974 of 19483
Subject: Re: Decisions, Decisions Date: 12/17/1999 7:09 PM
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ed6713 wrote:

Retiring on 01/03/2000 assuming the world is still revolving, there is not a mass uprising like my survivalist neighbor is preparing for, good Lord willing & the creek don't rise. At a young 56.
What a selection of decisions to make. The biggest is to take the comfort of the monthly retirement check with the 100% survivorship feature for my wife or take the $$$ and do it myself. She wants the assurance of the guaranteed monthly check for the obvious reasons. On the other hand, the interest rare the retirement fund is using is a paltry 6.04%.
What's a guy to do?? Give it a try and risk the "I told you so" or go with the security?????

====================================
jfschutz@yahoo.com writes:

Congratulations on your early retirement!

On the money for after age 59 1/2 why not do both! An Equity Indexed Annuity provides a guaranteed return of principle even in a market crash while allowing you to participate in market growth!

Best of luck to you!

Regards,
jfschutz@yahoo.com

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