I am admittedly not very experienced with managing money. Looking for some thoughts on a decision I need to make.
Some data.
Age: 56
Married, wife works occasional short-term contract jobs - she’s the same age. She has no pension or 401k.
Recently let go from company that holds the pension.
Plan to work until at least 65, if not longer. Will contribute to 401k wherever my next job is.
Pension choices:
Lump sum: $508,000
Annuity with 50% survivor: $2850/$1425
Existing 401k: $102,000
We do have some debt outside of our mortgage, but not a crazy amount.
Big decision on pension is lump sum or annuity. If lump, would likely place into a Vanguard IRA. However, because I am over 55, I could start collecting the annuity immediately without penalty. I’ll guess most advice will be to take lump sum, but considering taking the annuity for a few reasons:
1. I don’t know how long it will take to find my next job, and the income now might come in handy, even though I realize it’s a permanent decision.
2. Assuming I do find a decent job, I could take the annuity each month and invest it. This is appealing since it would provide access to the funds in cases of emergency.
3. Assuming again I will find a decent job, I will contribute to that 401k for up to 11 more years. Between current 401k which I will roll-over to an IRA, assumed contributions to new employer’s program (plus their match), and the annuity itself, without any emergency withdrawals, should come up with at least $350k by 65 and At least $400k by 67 with even a modest return.
That would give me $350-$400k or so for distributions from my investments in retirement, the $2850 from the annuity, plus estimated $3500/month for social security, with my wife also getting half of that.
Am I crazy, or does that sound pretty good? Is there a compelling case to roll the pension lump over into an IRA instead? That is what literally all of my peers in a similar situation are doing. I’ve tried running numbers, but I don’t really trust my results. Have spoken to a few FAs, and they all suggest taking the lump as well. Am I being too cautious to my own detriment here? Appreciate any thoughts!
Some data.
Age: 56
Married, wife works occasional short-term contract jobs - she’s the same age. She has no pension or 401k.
Recently let go from company that holds the pension.
Plan to work until at least 65, if not longer. Will contribute to 401k wherever my next job is.
Pension choices:
Lump sum: $508,000
Annuity with 50% survivor: $2850/$1425
Existing 401k: $102,000
We do have some debt outside of our mortgage, but not a crazy amount.
Big decision on pension is lump sum or annuity. If lump, would likely place into a Vanguard IRA. However, because I am over 55, I could start collecting the annuity immediately without penalty. I’ll guess most advice will be to take lump sum, but considering taking the annuity for a few reasons:
1. I don’t know how long it will take to find my next job, and the income now might come in handy, even though I realize it’s a permanent decision.
2. Assuming I do find a decent job, I could take the annuity each month and invest it. This is appealing since it would provide access to the funds in cases of emergency.
3. Assuming again I will find a decent job, I will contribute to that 401k for up to 11 more years. Between current 401k which I will roll-over to an IRA, assumed contributions to new employer’s program (plus their match), and the annuity itself, without any emergency withdrawals, should come up with at least $350k by 65 and At least $400k by 67 with even a modest return.
That would give me $350-$400k or so for distributions from my investments in retirement, the $2850 from the annuity, plus estimated $3500/month for social security, with my wife also getting half of that.
Am I crazy, or does that sound pretty good? Is there a compelling case to roll the pension lump over into an IRA instead? That is what literally all of my peers in a similar situation are doing. I’ve tried running numbers, but I don’t really trust my results. Have spoken to a few FAs, and they all suggest taking the lump as well. Am I being too cautious to my own detriment here? Appreciate any thoughts!
Statistics: Posted by AgentOfChaos — Wed Sep 18, 2024 10:21 am — Replies 6 — Views 280