Job related OT

Impossible to say without the numbers. Presumably they have to add some incentive for them to opt-out. What are they offering?

some incentive for you to let them to opt out

Generally the returns you will earn will not exceed the guaranteed pay-out. Even if they did you are giving up the assurance of pay. If your company is on shaky ground financially then you may well take a lump sum and get out while you can . If they are on solid footing though it is better to take the guaranteed outlay. Unless you have a sure thing business where you can invest the money like V.I. P fees.

Sorry, I forgot one. If you can annuitize (simple annuity only-no variables) the money into a guaranteed rate of %6 or higher then you might beat the payout and be able to get survivor benefits as well.

Do you need the monthly check at this time? If not, you might want to roll the lump sum into an IRA. The amount would grow tax-free, and you could decide when to start receiving distributions. The IRA would go to your wife when you pass.

The specific numbers are needed to decide what is a good deal for you. An honest and competent financial adviser should be able to explain the advantages and disadvantages of each alternative.

The IRA has age requirements involved. I don't know how old clubber is (nor do I want to know :) ), but that should be a consideration.

Companies have a horrible lifetime right now. Remember Netscape? Palm? Lehman Brothers? Enron? Countrywide? GM? And those are the big ones that were riding high and then... just weren't. Everybody involved took a haircut.

I tend to look at taking my money while I can. (And while Obama and pals talk the rich don't pay their taxes, the middle class sure does - thanks gov for making sure poor people have cable, internet, phones - ya know, all the shit I have to pay for while they get it free. But I digress.)

Like others have said... IRA or something like that will be good and you can pass it on. Now the roll over into it or take lump sum and start one. The financial advisor will help you with that. It is all dependent on age, amount of money, % on IRA and what not, etc.

If you do put it in an IRA be sure to withdraw adequate money as the years go by and make sure your wife does the same after she inherits it. If you leave it to an estate and their is no beneficiary that can keep it tax free (i.e. all too young) then you run the risk of knocking them into one of the upper tax brackets by receiving all that income all at once. Better to pay the lower tax rates as you go. Have to look beyond what is immediately in front of you.

And jackslash is definitely right if you can roll the full lump sum amount into an IRA that is free money right. (I forget the name of the calculation but the lump sum amount is less than the amount you would receive over time to account for the fact that you will now invest it on your own).

Name of the calculation to get the lump sum value for given future payments is "commuted value" if you need to ask what they lump payment would be.

@Clubbet - Maybe something to spend that lump-sum settlement on...

http://www.businessinsider.com/a-singapo…

Don't ignore "option 2," the lump sum distribution. First, because you CAN take the lump sum and put it into another IRS qualified retirement plan (IRA) and still avoid the immediate tax consequences. And second, because that "lump sum" may be a higher Net Current Value than the other options offered - when you calculate using increased future rates of return.

Generally speaking, you can get more return from your retirement money if you control the money. If you can cut out your former employer, you can also cut out the risk that the companies future results will hurt your income stream. Also, if you control the risk/reward balance, you can give yourself a raise - or dedicate money to your survivors. All of this can get complicated.

You are right to get advice from pros. (I suggest at least three.) Make sure they know your total income stream, estimated living expenses, long term and short term financial goals. Also, watch out for "advisers" who only offer "in house" investment options. And do not forget to include in your financial calculations sufficient "misc. personal expense" money to buy lots of lappers well into your 70s!

..."if its' good for them, then likely not good for me."
It's no secret that Corporate America is eager to shed employee pensions. Funny, my company is doing the same thing as yours, but only offering to those within 5 years of normal full retirement, not those already retired.

Others are right about seeing some qualified pros on this. One fundamental question is how much would your lump sum/rollover $$ amount be ? Another would be, do you desire the same income stream as your pension in question ? If so, how long can lump sum be expected to last ?

One angle not mentioned by prior posters: Is your annual pension payments greater than what the PBGC benefits would be for a terminated pension plan ? I don't know the financial stability or corporate structure of your company (are they a holding company with several subsidiaries), but if your pension is > than ~ $35-40K, then option 1 may well be seen in a more favorable light, particularly if you wish to pass on "something" to your spouse.

I'll pm you later on some hard #'s on my recent retirement exercise, scaled to a hypothetical $30K pension.

I receive a fixed rate pension with COLA in the range of $65,000. My wife gets $24,000 from the government pension. If she pre-deceases me mine jumps to $83,000. If I per-decease her, she keeps her 24k and gets 80 percent of mine. We also will need to start drawing on a 403(b) next year when we turn 70 1/2. What a country!

I suggest you send LMN a PM – he seems to know about $$$

Clubber and Randy Anukam in the same sentence,you knew I would chime in.

Man, there are whole bunch of different abbreviations here than the usual discussion board topics!

Some good advice as I expected, but steve229 was the hands down best. I tossed the entire sum into Asian women.

There are 2 interest rates to consider
1. The rate they use to calculate the lump sum. I think they are legally required to tell you what this is, if you ask
2. The rate you expect to earn in the stock market with this money, once it is in the IRA. Historically, this is around 8%-10% per year over a long period of time, but can bounce around (lately, it's been pretty good)

If 1 is lower than 2, this could turn out to be a good deal for you.

Rule of thumb is that you can take 5% of your lump sum out each year. If you invest well, that amount should grow over time. Compare the 5% of the lump sum to monthly/annual payments you were getting to see how this works out for you.

And, finally, I'd suggest you not put everything into stock right away. You might consider 20%-40% in stock initially (the rest in a money market or short term bonds), then maybe another 20% per year until you reach where you want to be. That way, if stocks drop over the next few years, you won't take a hit before your assets have a chance to grow.

mark94,

It seems to me they calculated the lump amount by taking what I get now, times 12 for a year, then times the actuarial tables for the final amount. No interest whatsoever. And their actualial years were a LOT lower then what I researched.