Marla, thanks for a fantastic article. I agree wholeheartedly with your premise of starting with the question "what do I want?" When I made the decision to retire it wasn't because I hated my job, but I realized I have a finite number of days left, and my goal is to live each day intentionally. We don't get any of these days back - there are no do-overs! So I basically start each day with the question "what do I want today to be?" Once I determined that I was financially secure enough to retire, my goal has been to really be intentional about how I spend my remaining days.
Great article, Richard. This same exact thing happened to me this year - I retired in August, fully expecting to take the company pension annuity. Just for kicks, I put the pension lump sum amount into the Schwab annuity calculator to see how much I could get monthly as a SPIA, and was shocked to find out I could get a monthly amount 26% higher from an external insurer! Digging into it, the reason was exactly as you said - the interest rate used for the company pension was set last year when rates were low, so of course by taking the lump sum, I was able to get an annuity for a higher amount this year. The timing worked out really well for me, retiring during this "sweet spot". My only complaint was that I had to forego about 3 months of payments - the company pension would have started right away, but it took me about 2 weeks to make the decision to take the lump sum, then 6 weeks for the company to process the lump sum request and send me the check, then 4 weeks for the annuity insurer to set up the account. But at a 26% higher rate, I'll make up the 3 missing payments within a year! The marketplace annuity also has the benefit of offering a 10 year period certain, so if I die early, my beneficiary will get the remaining payments up to the 10 year mark.
Comments:
Marla, thanks for a fantastic article. I agree wholeheartedly with your premise of starting with the question "what do I want?" When I made the decision to retire it wasn't because I hated my job, but I realized I have a finite number of days left, and my goal is to live each day intentionally. We don't get any of these days back - there are no do-overs! So I basically start each day with the question "what do I want today to be?" Once I determined that I was financially secure enough to retire, my goal has been to really be intentional about how I spend my remaining days.
Post: What Do You Want?
Link to comment from November 30, 2022
Great article, Richard. This same exact thing happened to me this year - I retired in August, fully expecting to take the company pension annuity. Just for kicks, I put the pension lump sum amount into the Schwab annuity calculator to see how much I could get monthly as a SPIA, and was shocked to find out I could get a monthly amount 26% higher from an external insurer! Digging into it, the reason was exactly as you said - the interest rate used for the company pension was set last year when rates were low, so of course by taking the lump sum, I was able to get an annuity for a higher amount this year. The timing worked out really well for me, retiring during this "sweet spot". My only complaint was that I had to forego about 3 months of payments - the company pension would have started right away, but it took me about 2 weeks to make the decision to take the lump sum, then 6 weeks for the company to process the lump sum request and send me the check, then 4 weeks for the annuity insurer to set up the account. But at a 26% higher rate, I'll make up the 3 missing payments within a year! The marketplace annuity also has the benefit of offering a 10 year period certain, so if I die early, my beneficiary will get the remaining payments up to the 10 year mark.
Post: Rates Up Lumps Down
Link to comment from November 30, 2022