I was talking with my financial advisor recently about investment options for my pension lump sum. This is a great time to invest in both stocks and bonds. The stock market is significantly down, and I like buying things when they are on sale. On the bond side, interest rates are higher than we’ve seen in decades.
Yet another reason to take the lump sum now. Of course, you should consult a professional advisor and not listen to a troll like me.
@5zpz I actually have a chinchilla farm, about 500 wheels, chinchilla count varies from day to day. Harvest just about enough juice to power my cell phone.
Chinchillas love to run on wheels. However, because they have delicate skeletons, they require a very specific, high-quality wheel to run safely. A wheel can produce some electricity. About 0.5 milliwatts, which doesn't sound like much but every little helps to offset the farming cost.
A risk verses reward scenario. Get it right, and you look like a genius. Get it wrong, and you look like a pen15.
OP here. I have been doing my own investing for most of my life. I've had a working relationship with a financial planner for over 10 years and have built trust with. I'm getting more professional help as I get closer to retirement as these will be the most critical financial decisions of my life. And I made the decision for the lump sum, not the financial planner. Anyone who wants to risk keeping their pension with Ford for the rest of their life, wish you luck. Anyone who thinks any changes in the pension plan will benefit the retiree is a lot more optimistic than I am. I'm a troll anyway, so you can ignore this post.
Raising chinchillas reminds me of the song "Easy Livin'" by Uriah Heep (1972).
https://www.youtube.com/watch?v=JLk4_t8B7po
I'm laughing at the chinchilla farming scheme still going going around for at least 40 years since I first recall hearing it. In the 70's it was raising Angora rabbits which morphed into mink & chinchilla farming as the easy money on a small lot.
When you retire you can elect to take COBRA for 18 mths (some longer, should they meet the special requirements) something the ViaBenefits site/people Ford directs you to use DOES NOT TELL YOU! And, it costs a LOT LESS than any insurance offered through that ViaBenefits site!
The Pension Benefit Guaranty Corporation is a U.S. Government Agency. How much do you trust them to tell you the whole truth and nothing but the truth, so help them God?
My FP ran the numbers both ways (lump sum, monthly annuity pmt) and put everything in black and white to PROVE which option is best. I didn't have to just trust their word for it. And they should tell you that it will vary by individual.
Anyone NOT taking a lump sum could be at risk, should Ford elect to change the pension (i.e. freeze it, move it to FRP (like new hires have), etc.) Should they go bankrupt (God forbid!) you could end up getting 55% of your annuity payment.
Find a good financial planner and review all the options.
Take the lump sum, put it into a balanced 60% stock/40% bond index fund (vanguard has them), proven track record of 6% over the last 22 years. Expense ratio 0.07%.
Ask if your financial planner, for that cost, can they beat that, or show you past results from customers portfolios.
As Ron Popiel says on the tv informercial “set it and forget it”.
Which is better? Taking the lump sum or the monthly payment?
What is the risk of NOT taking the lump sum?
It is in the interest of the Financial Advisor that a person takes the lump sum option. My guess is that they will always suggest taking the lump sum.
Any comments?
Every planner will tell you take the lump sum if they make their money for "funds under management." Can you buy an annuity for the same price of the lump sum and get the pension amount? If you can , do that. My guess is you won't be able to.
That advisor is thrilled that you are taking the lump sum!! More $$ for them! Do yourself a favor after you retire -- do your own finances and investing. It's not rocket science! :)
My uncle was laid off from Ford 5 years ago and says it was the best thing that ever happened to him. He opened a lucrative business raising Chinchillas.
https://www.cuddlebugchinchillas.com/breeding/considerations/asabusiness.html
@nke+1j6YPRbd "they'll tell retirees under 65 to go to Obamacare. "
Already did that starting in 2022.
If you took the lump sum and you invested it in 20 Year Treasury Bonds when the rate hits 15% (and the rate drops back to 4% the day after you invest) you would look like a genius.
looks like ford will shed atleast 10000 as time goes on... too many workers says ceo....
Ford already pulled all retiree health care and forced everyone to Obamacare beginning this year. Save $800 a month from your lump sum per person just gust to pay the premiums. Then save another $7-14k for the deductible.
Read everything on this site https://www.pbgc.gov/
The best reason? Don't trust Ford.
They are going to pull some cr-p. No doubt about it. Either they convert everyone to FRP. Or they'll pull all healthcare coverage and they'll l tell retirees under 65 to go to Obamacare. Something. This company can't be trusted anymore. Its like they are purposely trying to sc--w the employees. They'd do the same to hourly except for the UAW.
Lump sum is a great option for those who can predict the future. United States 30 Year Bond Yield reached an all time high of 15.21 in October of 1981. It is currently at 3.86%. Will it go higher ? Maybe.