Tweet
One of my former companies had a US pension plan. Like many other companies, they have decided to terminate the plan and I need to take a decision on whether to take the lump sum payout now or do nothing and get my monthly pension payouts upon reaching age 62 as originally planned.
Current info:
monthly pension payout is ~$1500 with 3% yearly adjustment for inflation
pension payments would begin at age 62 and continue until death and then be transferred to my wife who is sole benefactor on the pension plan.
Taking a lump sum payment now would be ~$125k paid out May of this year.
There are other payout choices including a life annuity payout that would be $590 a month also starting in May of this year.
I am 48 so if I do nothing, I start to receive ~ $1500 month in 14 years.
What are some of the ancillary things I should consider in making this decision?
Additional info on my personal financial situation:
I do not necessarily need the money now, have ample retirement savings (> $1m), EF ($70k), and typically cash flow my yearly living expenses. If I did take the lump sum, I would use the proceeds for some major home improvements planned (~ $75-100k). I also have money saved in mutual funds separate from retirement accounts to cover these costs as well but in taking the lump sum, I can leave the money in these investments alone and continue to ride the current market wave.
I plan to live in the house in which the renovations would be made until 60-62 years old and then down size.
I know there are tax implications of taking the lump sum now for my 2017 filing but what are some other considerations?
Is there a good decision calculator out there someone might recommend?
Do I have the luxory of taking the pension lump sum and rolling it into one of my retirement accounts (401k or IRA)? I think the answer is no.
Current info:
monthly pension payout is ~$1500 with 3% yearly adjustment for inflation
pension payments would begin at age 62 and continue until death and then be transferred to my wife who is sole benefactor on the pension plan.
Taking a lump sum payment now would be ~$125k paid out May of this year.
There are other payout choices including a life annuity payout that would be $590 a month also starting in May of this year.
I am 48 so if I do nothing, I start to receive ~ $1500 month in 14 years.
What are some of the ancillary things I should consider in making this decision?
Additional info on my personal financial situation:
I do not necessarily need the money now, have ample retirement savings (> $1m), EF ($70k), and typically cash flow my yearly living expenses. If I did take the lump sum, I would use the proceeds for some major home improvements planned (~ $75-100k). I also have money saved in mutual funds separate from retirement accounts to cover these costs as well but in taking the lump sum, I can leave the money in these investments alone and continue to ride the current market wave.
I plan to live in the house in which the renovations would be made until 60-62 years old and then down size.
I know there are tax implications of taking the lump sum now for my 2017 filing but what are some other considerations?
Is there a good decision calculator out there someone might recommend?
Do I have the luxory of taking the pension lump sum and rolling it into one of my retirement accounts (401k or IRA)? I think the answer is no.
Comment