I took the pension that had a guarantee amount for my wife. She is five years younger than me. I have been retired now for ten years. It has worked out good for us since we can budget that income. She also has a pension and my SS is decent. We are not loaded but we have two homes and travel when we want.
Interesting push for pension over lump sum
- Thread starter Sj08
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I believe that is for private pensions - which really aren't guaranteed at all - not state pensions.
State's have no legal way to default - because in theory they can just collect more taxes. The problem of course are in states that have made huge promises, the bill is so big they have to cut back on services for the rest of the population. This will come to a head at some point.
Veering off-topic....
Given OP's health history, OP should find out his/wifey's water source history. home well, city-river, city-lake, etc.
there tends to be less cancer in urban areas than rural---nirates, natural radioactive elements in water might be the answer. but it is an unanswered question.
Depending on the answer, you may want to think of switching to bottled distilled water for drinking and soups/stews. Or even getting a high-powered home water filtration system.
Given OP's health history, OP should find out his/wifey's water source history. home well, city-river, city-lake, etc.
there tends to be less cancer in urban areas than rural---nirates, natural radioactive elements in water might be the answer. but it is an unanswered question.
Depending on the answer, you may want to think of switching to bottled distilled water for drinking and soups/stews. Or even getting a high-powered home water filtration system.
I’ve gone down the clean water rabbit hole before and it doesn’t seem to have a clear or good end. Can’t drink well water cause of the contaminants in the ground. Can’t drink city water of the chemical used to treat it. Can’t drink bottle water cause of the plastics and those typically come from city water sources. So we’re double dipping there. Get a filter you say? What’s in the filter media and where is it made because they can have chemicals which leach into the water and are a breeding ground for bacteria. It’s all bad to some extent.
I vote keep working for 6 years
Home electric distiller (stainless steel)
cons: slow (might need 2 or more), relatively cheap.
But it also removes the beneficial minerals like sodium, calcium, magnesium, potassium, etc.
If the pension plan is underfunded, taking money out as a lump sum makes it even more underfunded. If you leave the money in the pension fund, they hope to be more solvent in the future when they will be paying you.
The irony is most people choose to work in lower paying (relative to the private sector) public service roles for the benefits like a “guaranteed” pension and job security.
Easy work and gravy train retirement is a powerful attraction
Yes 6 years more give a higher net worth, but if 6 years is good, 10 would be better, but at 59 only 3 more years to collect SS at 62, but 62 is the reduced anount, so might as well go 5 more years to get the full benefit, but by that time it will most likely be raised to 70, at that point, might as well keep working....
I would say thats what makes them stay for sure. Most, in South Carolina at least, are teachers and first responders. I don't think they went there for the pension. Public works likely did given they can make more in the private sector.
They get 1.82% of their final years pay x number of years of service. The benefit can only go up 1% or $500 per year, whichever is less. So it sounds really good, unless inflation is high when you retire.
Its also ridiculously underfunded. I will need to figure out what my wife should do because she will likely leave early. She hasn't been that many years - she stayed home with our kids. Unfortunately the cash out isn't very good either. She would have been better in their 403b, but wasn't given an option - different story.
Says the retired guy that just bought a $170K van.
I am guessing that was much more than your first house?
I thought about it.
But your lump sum would more reasonable for actuarial lifetime is my main concern
Mission creep.
The problem with getting retirement advice from a retired person, is you can't get advice from all those that died before they retired, or who's health was really poor by retirement.
Says the guy who has no plan to retire.
First house and in Orange County Ca was $95,000Says the retired guy that just bought a $170K van.
I am guessing that was much more than your first house?
Thanks for the replies
Getting a little off topic, I was/am interested in the phone call I got. Is the guy supposed to represent me, a fellow employee, or the State?
I'd like to adresss a few comments.
I should have mentioned it in the first post, but this lump sum/pension has no bearing on my decion to retire. I had this goal since the age of 5 or 6. Been living frugal and investing in index funds as much as I could. The bulk of my portfolio is in a non retirement taxable account, some in 457, roth, and soon a little more in an IRA.
I agree that working for a government can be gravy, but my job was a highway maintnance worker. Some days were easy, but most of the summer walking down the highway filling cracks sucked, and they changed the material and the fumes was causing me headaches daily, I decided it was not worth it anymore.
Getting a little off topic, I was/am interested in the phone call I got. Is the guy supposed to represent me, a fellow employee, or the State?
I'd like to adresss a few comments.
I should have mentioned it in the first post, but this lump sum/pension has no bearing on my decion to retire. I had this goal since the age of 5 or 6. Been living frugal and investing in index funds as much as I could. The bulk of my portfolio is in a non retirement taxable account, some in 457, roth, and soon a little more in an IRA.
I agree that working for a government can be gravy, but my job was a highway maintnance worker. Some days were easy, but most of the summer walking down the highway filling cracks sucked, and they changed the material and the fumes was causing me headaches daily, I decided it was not worth it anymore.
Unless your paying him and you both have signed some sort of fiduciary agreement, he absolutely does not represent you.
Not saying the state purposely screws its employees. The State will do (in theory) what is best of all the state's citizens as a whole, which may or may not be good for you. HIs advice may not be bad. Most people have no ability to manage their own money.
As a general rule an agent of the state represents the interests of the state and probably by extension their own job and desire to keep it. If pensions are being underfunded and drying up I imagine that isn’t looking too promising for the state or his position.
I'm pulling a small private company pension. They canceled the program some years back, but nicely, they increased company contribution to the 401K instead. Anyway, I received a letter some months back stating that they will be sending out buy-out offers to former employees...excepting those (like me) already drawing the pension. Boo.
Companies hate pensions because their liability is undefined; the person could live to 60 or 100.
At another company I worked for, the production workers belonged to a union. Well, said union was drastically underfunded on their pension labilities. In response, they changed the retirement qualification requirements. End result, a bunch of workers choose to leave and "retire" even though they weren't quite ready yet. It was either that, or they would have been forced to work additional years beyond their desired retirement date. It seems the union took an initial hit on payouts, but in the long run, they benefit by pushing back the retirement age.
I suspect all these various decisions relate to cash availability, long term liabilities, stock performance, interest rates, etc. There is no one clear answer why they do what they do.
Companies hate pensions because their liability is undefined; the person could live to 60 or 100.
At another company I worked for, the production workers belonged to a union. Well, said union was drastically underfunded on their pension labilities. In response, they changed the retirement qualification requirements. End result, a bunch of workers choose to leave and "retire" even though they weren't quite ready yet. It was either that, or they would have been forced to work additional years beyond their desired retirement date. It seems the union took an initial hit on payouts, but in the long run, they benefit by pushing back the retirement age.
I suspect all these various decisions relate to cash availability, long term liabilities, stock performance, interest rates, etc. There is no one clear answer why they do what they do.
