Starting pension at 55.

[Captaindano]

Hi, I am new to this thread and will be applying for my pension to begin in September of this year. This is from my former employer that I got laid off from in 2009. I have to make an important decision and was hoping someone could pitch some advice. My options are as follows:

1. Draw $1344.00 from 55 to 62 yrs. of age. When I turn 62 it terminates. I am married and if I pass at say 56 yrs. old, she gets nothing.
2. Draw $403.00 starting at 55 for the rest of my life and if I pass away before my wife she gets to draw it for the rest of her life.

Of course, I have to pay taxes on this. I will be asking some other advice on that later.

This really isn't much of a Retirment money wise because I got cut during the layoff, but it is a little something to help. Wea are both in decent health as I know that's a big factor in the decision.

What would you do if you were in my shoes?

Thanks for any advice.

 

[jazz4cash]

I would take 403/mo joint life option but first I would beg for a lump sum option. It’ll take >23 yrs of the lower payment to equal the 55-62 payment.

 

[Texas Proud]

You did not say how old your wife is... her age can make a big difference...

The next question is do you need the money? Will it be spent or put in savings and invested?

And finally, what about a cash out option? How much would it be?

 

[Captaindano]

My wife is 57. I don't really dont need the money now. I would like to save / invest in something. Home is paid for and kids ate grown doing well. The plan doesnt mention a cash out option. My job pays well and I'm on track for a nice 401k nest egg at 62.

 

[Captaindano]

I would take 403/mo joint life option but first I would beg for a lump sum option. It’ll take >23 yrs of the lower payment to equal the 55-62 payment.

I'm leaning towards that. I'm concerned I may fall on hard times. Start using the larger amount. I pass on and my wife has nothing. At least the smaller amount she can eat.

 

[ncbill]

Hi, I am new to this thread and will be applying for my pension to begin in September of this year. This is from my former employer that I got laid off from in 2009. I have to make an important decision and was hoping someone could pitch some advice. My options are as follows:

1. Draw $1344.00 from 55 to 62 yrs. of age. When I turn 62 it terminates. I am married and if I pass at say 56 yrs. old, she gets nothing.
2. Draw $403.00 starting at 55 for the rest of my life and if I pass away before my wife she gets to draw it for the rest of her life.

Of course, I have to pay taxes on this. I will be asking some other advice on that later.

This really isn't much of a Retirment money wise because I got cut during the layoff, but it is a little something to help. Wea are both in decent health as I know that's a big factor in the decision.

What would you do if you were in my shoes?

Thanks for any advice.

In my state at a standard, non-tobacco rating a $100,000, 10-year term policy is only ~$400/year.

For someone your age.

Which would let you take the higher payout w/o worrying about dying before age 62.

 

[Captaindano]

That is a good bit of info to consider.
Thank you for that.

 

[Mark1]

I would probably take the higher payment option, due to my concerns about future inflation and increased COL. I started my lifetime pension when I was 55 years old at discount (compared to 60 years old without a discount), due to my concerns about future inflation eating away at its purchasing power.

I'm leaning towards that. I'm concerned I may fall on hard times. Start using the larger amount. I pass on and my wife has nothing. At least the smaller amount she can eat.

I have to believe that based on your 401K, future SS, etc., your DW will be able to eat without the pension (?).

 

[Surewhitey]

If I did my math right, I'd take the larger sum and put it in investments. 7 years of contributing it & then, after 7 years stop, you should have $550k in the following 16 years (total of 23 years). Based on 8% return...

 

[Captaindano]

All of you have very valid points i have taken seriously. I like what Mark1 said about the purchasing power in years to come, penny candy went away in a hurry.... And what ncbill pitched about a life insurance policy. Also what Surewhitney said about investing. My concern was "leaving the wife a little something" but the smaller amount it 10 years won't be but a "little nothing" anyway.. I did some math and now i am leaning towards taking the larger amount (1344.00) rolling it into something. Math shows that if i do that for my last 10 years of employment what it should make by then will produce enough interest to draw the smaller amount (403.00) monthly from thereafter. Take a 10yr term 100k policy and if i pass before then the wife will have the 100k and what the 1344.00 has accrued. Am i making sense??

Thanks to each of you for this valuable input.!!

 

[Texas Proud]

I would reach out and ask about rolling it into an IRA.... Most all of the pension/retirement/whatever I have had was able to roll over...

HR can be your friend... and if you have a person at a broker they might be able to help in that...

 

[Captaindano]

Yes, Thats my next hurdle is finding an investment that i can collect the entire amount to invest. I think IRAs only allow up to $7500 per year. I may start another thread to see if anyone has any good input on that like all you have given me.

 

[Texas Proud]

Yes, Thats my next hurdle is finding an investment that i can collect the entire amount to invest. I think IRAs only allow up to $7500 per year. I may start another thread to see if anyone has any good input on that like all you have given me.

I am not saying to invest the monthly payments, but to roll the whole thing... it can be any amount... there is no limit... as I had said, I do not know of many pensions that you cannot roll over except gvmt ones... so, is this a gvmt one?

This is pure speculation, but I do think there is a limit to how often you can 'roll' something over... so if you start to get the monthly checks you might be stuck with one or two to roll and the rest you have to keep in a regular old brokerage or checking account...