Anyone care to share which company they are rolling their lump sum over to?
17 replies (most recent on top)
With Aug 2021 interest rates still applicable it is a perfect time to take the lump sum if you are retiring by Nov 30th this year. In 2023 annuity option may be better after the ~25% cut to lump sum. If you like lump sum get out by Nov 30th this year.
Ask yourself...is the company going to be around for all of your retirement? Pension would be nice but I think at this point, it's very risky.
Why take pension? Some people are far from Social Security age and want the income stream. Taking a lump sum when we rolling it over or withdrawing for a healthy tax bite. I would also spike your income level that year if you withdraw. This affects you if you are seeking financial assistance/ aid for any dependents. If you are relatively young running the numbers over 25 years but the pension at a larger payoff, with no risk of investment loss. Some people cannot handle a large chunk of money and they know it. So there are multiple reasons people may choose a pension.
The lump sum is the present value of your pension. It is the amount required to generate that monthly income at current rates. But it is not really current rates. The real present value of your pension at current rates is what you will get in January. Rather than looking at it as losing money in January, look at it as your lump sum is 20 - 25% overvalued right now. It is overvalued in relation to published, available rates. Yes, most assume some market risk in order to get even greater returns, but a secure income stream that beats the pension is possible. When the discrepancy between actual rates and rates used to calculate lump sum is so large, why would anyone turn down a 25% capital gain and take the monthly pension?
I am taking the annuity (i.e. no lump sum). No kids, so opting for the monthly flow. I like the security and confident my investments will protect me later on if Ford goes belly up. I get why people are sour on Ford. Even though I was let go after 25+ years, the company gave me a lot to which I am thankful for. And yes, I am hoping Ford finds its way before Farley destroys it. I have better use of my emotions that being bitter about something I couldn't control.
Timing is everything. If you retired at the end of last year and dumped your lump sum in the market, you took a beating. On the flip side, for those that retire now and dump it in, it’s going to feel pretty good with the market 20% off the highs. That is why there has never been a better time than now to retire and take the lump sum. And there may never be again.
If your friend decided to leave it in the market, then there is a risk. But you do realize that annuities are currently available at better rates than those used to calculate the pension present value?
Took monthly pension and am very glad given the bear market Having to withdraw on your lump sum when it has lost money is not a good situation My friend took lump sum in 2020 and has less money now than the original check with no withdrawals. No fun to just watch it shrink.
No. Lump sum.
- Not tied to the company for life. Avoid any bankruptcies or policy changes
- In control of my money. It will rise and fall based on my decisions
- Can leave money to my heirs
- Access to a large amount of money in case of a dire emergency
Lump sum. It is available at a high valuation, thanks to historically low interest rates.
Your reference to “pre HRA healthcare”……?
I think the options are COBRA (can be paid w HRA dollars if you’re vested) or go directly to using HRA and seeking policy on via benefits or thru an agent or go directly to BCBS?
Are these the options available for those eligible 55yrs/10 yrs service or 30 yrs service?
The main thing I feel makes the lump sum the choice is that your beneficiary that you designate will get the funds in the event you pass away, or if you and spouse are both in a fatal car crash or something. Just one person's opinion. Thx
After verifying the rate of return and checking the PBGC, I completed the form necessary to get the monthly pension. Due to personal circumstances, I didn't send it in for a few days. When I reconsidered, I changed my mind and went with lump sum.
Why?
- Primarily because the annuity rates presently offered in the market yielded a higher return—hundreds more per month.
- While the PBGC insures pensions (with some caveats), if you live in Michigan, the state insures annuities up to $250K. If you get annuities with multiple providers, you should be covered
- You can purchase annuities that give survivor benefits, often at a very low cost.
- I plan to work again and don't need the money immediately
- I can resist get rich schemes, extended family trips to Disney World, and friends and family members looking to borrow money.
So, yes, I went with the lump sum, but plan to convert it into an annuity, a sort of "personal pension". By doing this, I've effectively signed up to monitoring annuity rates and making my own decisions in regards to timing and investment amounts.
Finally, unlike most people on this site, I don't think the monthly pension is a bad deal, but whether it's the best deal for you depends on your circumstances.
lump----pension choices form is locked and loaded.
Now we only need to worry about the Pre HRA agreement for healthcare..
I sure hope this EV plan works.
I am NOT, lump sum.
I am. Lump sum.