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DLHKL posted;
"There is 13,187. credited to the plan which she can take (rollover) or leave on the table.

If she leaves it on the table:

657.00 monthly (guaranteed 3 years to spouse if she dies)
645.00 monthly (10 years guaranteed)
631.00 monthly (15 years guaranteed)

If she takes the 13,187:

542.00 monthly (3 yr guarantee)
532.00 monthly (10 yr guarantee)
521.00 monthly (15 yr. guarantee)

Wanted to see if anyone sees a clear choice."

It all depends on how long she will live and he will live. Taking mortality rates, it's unlikely that he will live longer than her. Irrespective of that
let's use 83 as an assumed age of death for your mother, here are the calculations...

I have assumed that this pension amount will continue for as long as she lives. My sassumption is that the guarantee period is a payout to the spouse if she dies before the guarantee period is up. If the guarantee period means that there is no guarantee of any payment past that period, the worst case would be death at the end of the guarantee period.

Here are my calculations.

1> $657 vs $542...

Additional cash flow of $135/mo ($657-542) for 25 years (83-61+3) that equals $13,187 present value investment would need a return rate of 11.6%. If the cash flow is for only 20 years, the rate of return needed 10.8%. For 10 years, 4.23%.

2> $645 vs $532..

Add'l cash flow of $113/mo. Return needed for 22 years, 8.8%. For 15 years, 6.2%. and for 10 years, 4.6%.

3> $631 vs 521...

Add'l cashflow of $110/mo. Return needed on $13,187 for 22 years would be 8.4% Return needed for 15 years, would be 5.8%.


There are other methods of trying to evaluate the worth of the additional cash flow but they will also hinge on an estimation of longevity.

If you take the $13,187 and invest without concern to taxes, you would need to find an investment that would be a guaranteed 11.6% to produce the additional $135/mo difference in scenario #1 for 25 year.

If the payments continue until your mother dies and if she is in good health, I think it would be better to leave the money in the pension. If your mom is unlikely to life at least 10 years then it may be better to takes the money.

I did not take taxes into consideration and if taxes must be paid on this distribution then your mother's income now versus the future income could be more of a determining factor.

Hope this helped. If you are more confused than before, email me and I will try to clarify the issue.

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