No. of Recommendations: 3
LaJollacowboy and all who have replied in this thread,

This series of postings is an example of why I value my subscription to the Motley Fool. Many perspectives and references to other resources have been offered. And, the advice from people who understand that your 20%/yr assumption is foolhardy, has been civil and good-willed.

Here's something that I think maybe only one other person has addressed. Yes, you should decline the lump sum payout. But no, you should not leave your financial future entirely in the hands of the two (or maybe even one? don't think you mentioned whether you and your wife will be paid by the same plan) defined benefits plans.

DB plans, even public ones, are not risk-free. In your specific circumstances, it seems to me that the best rationale for you (and your wife, who sounds like an apt student) to learn about investing is not so that you can increase your income while living or your distributable assets at death, but so that you can reduce the risk of greatly diminished income.

And the starting point for reducing risk would be to divert a substantial portion --perhaps a third or more -- of the monthly income from the DBs into places that will continue to provide income to you if/when the DB income streams, and/or the medical benefits, become diminished or disappear.

This could be a mix of equities, annuities, bonds or other instruments. The point is: the income stream from the DBs is large enough that you can afford to regard some of it as well-"spent", insurance-style, by investing it outside of the DB plans and thus avoiding a "too many eggs in one basket" risk scenario. Who knows, you might even earn better returns on the diverted funds, than from the DBs. But that would just be gravy.

A fee-only financial adviser would be a good idea when you get close to the time that you begin collecting from the DBs. Between now and then, there is time to continue on your path of learning about retirement investing. This will be beneficial regardless of how little, or how much, of the work you and your wife choose to do yourselves, in managing the diverted-from-DB funds.

You will get a gentler ride financially and emotionally by diverting the funds from the DBs gradually, rather than via an initial lump-sum payment.

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