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the company says i haft to do this . it will pay more than if i rolled it over.
Hi Josh, may I ask a non-financial question…………..what breed is Pablo?
Dave Ramsey has nearly a blanket policy of advising people to cash out their pensions…. It is the only thing I disagree with Ramsey on. Not all pensions are equal, I am a police and fire pension member in state government and my pension is second to none. Combine it with 30 years worth of voluntary contributions in a 457 deffered comp program and at age 51 I am only 4 years away from shitting in high cotton when I retire at age 55 with a full pension that transfers to my wife upon my death and includes state paid family health insurance until age 65 thanks to collective bargaining negotiations agreed to in the 70’s. Dave Ramsey is great, but he’s not right on everything.
Is this an argument against the lump sum or against funding the lumpsum with an annuity or both? #1 6.3% IMO isn't the payout. If it was the payout, (29K / 455K) you would still have the 455K left. Part of the payout they are giving you is the principal of the lumpsum you could be getting. The better number would be take the lump sum $455K, take the -29Kannual payout, put an assumed life expectancy say 20 years 65 to 85 and a future value of zero. The hurdle isn't 6.3, I think it is closer to 2.43%; #2 The other big advantage of the lump-sum is the ability to control the payout of the tax liability. Once the pension income starts, you can't stop it even if you wanted to. #3 For or against funding it with an annuity. I think you educate people on both options objectively and let them. choose.
We have a Finn too.
He is a cute poodle shitzu mix. Very needed and loving.
How about rolling 150K of a 401k into an annuity?
Finnegan was my first dog's name!
Hey Josh, When are you better off taking the lump sum payout? We have a $2,000/mth pension with joint survivor benefits. Lump payout is $510k.
The downside risk of a pension is inflation. If your pension doesn't have cost of living increases and you have a long retirement (20+ years) you will feel the pain.
I know youhate annuities but mines paying me 8% for the rest of my life and the insurance company has a very high rating unbelievable reserves that’s pretty good to me and today’s marketYou sleep well at night knowing that you’re not tied to the market
I’ve never been a fan of any insurance based product. Always skeptical that the underlying costs, generally speaking, make it an unattractive investment option.
Like Josh said,know exactly what you’re buying. My Advisor sold me a big turd of a annuity. Almost better under the mattress,buyer beware.
I had the chance to do that through my comany. I thought about it for 1 minute. Pension with 100% survivor….NO regrets. I already had a sizeable 401K…
Aren't pensions basically annuities? Is the fellow you're addressing talking about a private company pension or a government pension? Does that make any difference in your analysis?
Not a pension but I made the mistake of putting after tax dollars in an annuity. Yea I listened to an insurance salesman. It guaranteed 1% interest and the most it has paid has been 2% during the five years there with mainly paying the 1%. It matures in 2022, and I plan to cash out and invest in VTI or Wellington. I only owe taxes on the gain.
The title said not to put in an annuity but then you talk about setting up an annuity.
Two companies around me have recently had a one time payment out of your pension or they would move it to an annuity. I assume that is what you are talking about. I took the payout and invested in Wellington. I wasn’t sure the company would still be in business. In two years it has increased 39%.
I did what you said.
Too late for me. My bank talked me into starting one but I haven't put in for over 10 years. It's a IRA roth annuity with Jackson and boy it has some fees. Very little ability in choice of funds. Been doing my own brokerage funds since however.
What if he uses the lump sum payout to delay his social security. It will be the equivalent of purchasing a guaranteed 8% annuity with a 100% survivor benefit and a cola adjustment?
What about a 457b into an Annuity?
pension + no debt = retirement.
annuity + no debt = no retirement
When my company eliminated it's pension plan we had two choices, roll over money into a 401K or an annuity with payouts starting at 65., Since it was a small amount of money and I was a long way from retirement I chose the annuity. However, due to this unexpected inflation and this crazy stock market run up it would have been better to take the small payout and let it ride on the market. Future market crash or the money being eaten away by inflation, it would be a loose-loose situation. Never did I expect we would have inflation again like in the 1970's I thought we had learned our lessons. I don't think we have learned our lesson on the stock market as well, it will go down, we are being lead my meme investors.
This was helpful. Thanks! I am resubscribing to your channel, and will just avoid watching your politically charged content.
Josh I hope this is not a stupid question but what happens after the 20 years?
Only people that recommend into annuity are insurance sales people and financial planners who get a slice of the pie.
Josh, Thank you very much these short to the point videos they really help. What about companies that go bankrupt and your pension falls into the Pension Benefit Guaranty Corporation are they responsible to fulfill the 20 year a certain?
Quite a few years ago the company I retired from stopped their defined benefit retirement. New hires qualified for the 401k only. The last of the defined benefit folks are 50 years and up. Close to 40% of the work force falls into that 50 plus range. Annuity companies have found out 1000 plus folks will be retiring in the next ten to fifteen years. The bums are like sharks circling waiting for retirements. Unfortunately a few of my friends have fallen prey to these "Salesmen" and not only rolled their defines benefit plans but were convinced to roll their 401k's. I wish I had a buck for everyone I slapped in the back of the head. Not just hourly…I know two VP's that fell in this pile of dung.
As a former HP employee I had no choice. They converted all our pensions to annuities. It started 11/1.
Pablo