UnThreaded | Threaded | Whole Thread (22) | Ignore Thread Prev | Next
Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76398  
Subject: Re: Pension, annuity, or payout? Date: 9/24/2012 2:42 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
Hawkwin:

<<<Oh, they said the lump sum payout would be actuarily equivalent to if he took the benefits at age 65.>>>

"Don't take their word for it. Find out the amount and then do your own math. The amount they might give you in a rollover could be tiny compared to $4800 a month you could take now - and invest that money if you don't need it."

$4,800 a year (i.e. 400/month) now versus

$7,2000 a year (i.e. 600 month) in the future at 65(?),

not $4,800 a month.

Otherwise, I agree with you about getting the number and doing the math.

With interest rates so low right now, the lump payment might be reatlively high and rolled into the IRA could grow quite nicely.

I do not know if state pensions qualify for PBGC coverage, but given financial problems in so many states, there is a credit risk associated with leaving the money for future pay-out.

4,800 year * 18 years is $86,400 depending upon taxation of current benefits (ignoring TMV) it takes about 36 years for the $600/month to catch up to the early take amount (86,400/2,400), which would be age 101 (65 + 36). In addition, 400 month now versus 600 month in 18 years is a CAGR of about 2.4%, which is probably barely above inflation (if at all).

Regards, JAFO
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (22) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Foolanthropy 2014!
By working with young, first-time moms, Nurse-Family Partnership is able to truly change lives – for generations to come.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Macro Economics

Economic Implications of Cuba
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement