Does anyone know of an online site posting actuarial tables, either interactive or in a table/spreadsheet format? Switched jobs, need to decide to take lump sum now or life annuity in 28 yr.
1) Ask your HR manager. They will have your company's actuary make that calculation for you.2) Try the Society of Actuaries Homepagewww.soa.orgThey have a library where you may be able to download spreadsheet tables.Good luck!!
I am uncertain what exactly you are after. I have all of the society's mortality tables (9 of them) but they are all in hard copy.If, for example, you are trying to determine whether to accept a defined benefit at some date in the future versus taking a lump sum now; you will learn that the mortality tables become pretty insensitive to life duration after 30 years. As an example, the value of an annuity @ 8% interest (just an assumed rate) grows a whooping 8% from 30 years to 50 years of life; as a result, everyone kinda says who cares.TheBadger
Hard copy doesn't help much. If its in a spreadsheet, you can calculate annuity factors for given interest rates for each age.I once posted my thoughts on this matter a while back, and I still think this is usefulhttp://boards.fool.com/Message.asp?mid=13202330My mantra is to ask all questions to your HR or Benefits manager and have them ask their actuary (its what they pay them for) to prepare an illustration for you.
What I was suggesting (and I guess I did not deliver the puch line) is that you don't need actuarial mortality tables to compare a lum sum distribution vs. a future period defined benefit. As an example:You are 45 now and are offered either (1) $16,000 today; or (2) $500 / month commencing at age 65. Further, you feel reasonably confident that you can regularly achieve 8% returns on investments. Which should you take?The present value of the annuity can be computed as: @PV(6000,.08,25)/1.08^20 = $13,741; therefore one would take the lump sum. Further, you can solve for how many years it takes for the two to be equal by kicking up the "25". The answer is 67; therefore you would have to acquire the age of 132 to breakeven.Does this help?TheBadger
What I was suggesting (and I guess I did not deliver the puch line) is that you don't need actuarial mortality tables to compare a lum sum distribution vs. a future period defined benefit. We actuaries are a bit slow with the comedy. :)I totally agree with your statement. I was just listing the pros and cons of each choice. Also, I don't know if the original poster had his lump sum figure.Oh well.
Ask your HR manager. They will have your company's actuary make that calculation for you Haven't you ever read Dilbert? The evil Catbert LIVES. :-) Seriously, the HR dept. was one of my reasons for leaving.I thought of doing that, but the answer seems so clear that I figured I was missing something. Hypothetically, let's say a 37 yr. old could take $11,750 now or $275/month starting Nov 2028. I did an IRR inputting the $11750 as a negative and then 3300/month from age 65 to 100, and got a rate of 5.44%. If said subject (& wife) gets hit by a bus at age 80 it drops to 4.17, so it certainly appears our friend should take the money and run. My theory is at age 37, aggressive investments are suitable which should beat the 5.44%
Oops, premature send. I also wanted to thank both Bhis & Badger for your help. I was called away yesterday and didn't meant to leave you hanging.Badger, in your formula you use a period of 25. Where is this derived from?
Badger, in your formula you use a period of 25. Where is this derived from?This is just my estimate of longevity; starting at age 65; using 25 gets one to a terminal age of 90; actually somewhat aggressive; e.g. most 65 year-olds die before attaining age 90.More importantly; when evaluating alternative cashflows; almost irrespective of the interest rate used; the mathematics flatten out such that there is almost no material difference caused by using 25, 30, 40 or 50. Conversely, using 15 or 20 years versus 25 years can make a material difference in mathematical computations.TheBadger
I figured so. As to the meat of my question, given the numbers of our hypothetical friend, do you agree he should take the money and run? It seems that way to me, but it also seems so clear I'm afraid I'm missing something. The annuity appears to be discounted at app. 5.4%. Given the 28 yr. timeframe, we should be able to beat that.
As to the meat of my question, given the numbers of our hypothetical friend, do you agree he should take the money and run? It seems that way to me, but it also seems so clear I'm afraid I'm missing something. The annuity appears to be discounted at app. 5.4%. Given the 28 yr. timeframe, we should be able to beat that. I personally would take the lump sum. In my experience, so would most people. Though I would never advise someone to do so or not to do so.It really depends on the persons risk tolerance. Some people like the idea of a guaranteed rate of return until they die. If you do make it past 90, you will be in serious trouble if you didn't leave money in your trust. Most people, by virtue of simply being on this board, believe they can creamate that rate of return. I hope we are all right and we don't outlive their funds.
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