I actually took my pension as a lump sum 3 years ago, then used just part of those funds to purchase a joint SPIA with guaranteed return of premium that will pay me or my wife for the rest of our lives (whichever one lives longer). I used 1/2 of the 1.5 million lump sum amount to purchase the SPIA. Pension lump sum payouts are sensitive to the current interest rates at the time. I was lucky enough to hit the interest rate at the time of my retirement for the lump sum payout to be to my advantage. Using 1/2 of my lump sum to purchase the SPIA gave me the same monthly income as my pension would have paid me. The other 1/2 of the lump sum payout is in a Fidelity ZERO total market fund.
Thanks for the insightful article. I also planned on our retirement income to be 100% of my working income. I was lucky enough to have retired with a pension that would have accomplished that 100% goal. But with my wife and I being in Wade Pfau's "Safety First" camp and annuity payouts having increased over what my pension's monthly income would be, I took the pension as a lump sum and put most of that money into a combination of 3 annuities, one SPIA and two fixed indexed annuities. All 3 of those annuities have no ongoing fees. I know I "may" have done better by putting money in the stock market, but I did not want the hassle or uncertainty. I now know exactly what our income will be so budgeting ahead for fun things is easy. No financial advisor or tax accountant fees are needed. I just did my own taxes in less than an hour using Turbo Tax. Question: With annuity payout rates having increased, is it not mathematically superior to use an annuity for base income rather than using bonds? Bonds or Income Annuities: Which Are Best For Retirement Income? - Retirement Daily on TheStreet: Finance and Retirement Advice, Analysis, and More
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I actually took my pension as a lump sum 3 years ago, then used just part of those funds to purchase a joint SPIA with guaranteed return of premium that will pay me or my wife for the rest of our lives (whichever one lives longer). I used 1/2 of the 1.5 million lump sum amount to purchase the SPIA. Pension lump sum payouts are sensitive to the current interest rates at the time. I was lucky enough to hit the interest rate at the time of my retirement for the lump sum payout to be to my advantage. Using 1/2 of my lump sum to purchase the SPIA gave me the same monthly income as my pension would have paid me. The other 1/2 of the lump sum payout is in a Fidelity ZERO total market fund.
Post: Obsessed with a financial stress-less retirement
Link to comment from January 12, 2025
Thanks for the insightful article. I also planned on our retirement income to be 100% of my working income. I was lucky enough to have retired with a pension that would have accomplished that 100% goal. But with my wife and I being in Wade Pfau's "Safety First" camp and annuity payouts having increased over what my pension's monthly income would be, I took the pension as a lump sum and put most of that money into a combination of 3 annuities, one SPIA and two fixed indexed annuities. All 3 of those annuities have no ongoing fees. I know I "may" have done better by putting money in the stock market, but I did not want the hassle or uncertainty. I now know exactly what our income will be so budgeting ahead for fun things is easy. No financial advisor or tax accountant fees are needed. I just did my own taxes in less than an hour using Turbo Tax. Question: With annuity payout rates having increased, is it not mathematically superior to use an annuity for base income rather than using bonds? Bonds or Income Annuities: Which Are Best For Retirement Income? - Retirement Daily on TheStreet: Finance and Retirement Advice, Analysis, and More
Post: Rookie Year
Link to comment from February 7, 2024