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Started By
Message
re: Retirement - 1M lump sum or 5k per month until death.
Posted on 8/19/21 at 9:37 am to VanJoe
Posted on 8/19/21 at 9:37 am to VanJoe
If you took the $1M now and put it in QYLD you would get the $1M and also get paid out about 9 grand a month.
Heck, take it all, put $500k in QYLD, that'll be about $4.5k/mo, and invest the other half elsewhere that will grow. Maybe in another dividend fund like SCHD that pays out much lower but has been growing.
Heck, take it all, put $500k in QYLD, that'll be about $4.5k/mo, and invest the other half elsewhere that will grow. Maybe in another dividend fund like SCHD that pays out much lower but has been growing.
This post was edited on 8/19/21 at 9:41 am
1
Posted on 8/19/21 at 10:25 am to Dawgfanman
5k fixed income. No survivor benefits.
Posted on 8/19/21 at 10:37 am to VanJoe
No way!
Who KNOWS what the future holds and whether that money will deflate or disappear or retirement even go insolvent
Take the $1M - put somewhere and name beneficiaries - now money is guaranteed.
Then consider investment options
My 2 cents
Who KNOWS what the future holds and whether that money will deflate or disappear or retirement even go insolvent
Take the $1M - put somewhere and name beneficiaries - now money is guaranteed.
Then consider investment options
My 2 cents
Posted on 8/19/21 at 11:30 am to VanJoe
take the 1m and put it into dividend paying etfs like qyld, nusi, ryld. you can easily get 5k or more a month.
Posted on 8/19/21 at 11:48 am to VanJoe
quote:
5k fixed income. No survivor benefits.
That’s a great plot for a movie. Big Corporation has a stealth department that goes out and “takes care of” their retirees that opt-ed into the monthly payments to keep expenses down.
Posted on 8/19/21 at 12:02 pm to BallsEleven
quote:
Also, if you can average 6% returns annually with that 1M, you are making that 5k anyway
I think this is the most important calculation to do. I'd take the mil.
Posted on 8/19/21 at 12:07 pm to VanJoe
Take the cause pension may not be there. Invest the in growth mutual funds.
Posted on 8/19/21 at 12:07 pm to VanJoe
$1 mln now
vs.
P = $5k x ((1 – (1 / (1 + .05) ^ -312)) / .05)
P = PMT x ((1 – (1 / (1 + r) ^ -n)) / r)
P = the present value of annuity
PMT = the amount in each annuity payment (in dollars)
R= the interest or discount rate
n= the number of payments left to receive ((83 yo avg life span minus 58) X 12 months per year)
Pick higher of the 2
Unless risk of shorter life span changes results
Good luck!
vs.
P = $5k x ((1 – (1 / (1 + .05) ^ -312)) / .05)
P = PMT x ((1 – (1 / (1 + r) ^ -n)) / r)
P = the present value of annuity
PMT = the amount in each annuity payment (in dollars)
R= the interest or discount rate
n= the number of payments left to receive ((83 yo avg life span minus 58) X 12 months per year)
Pick higher of the 2
Unless risk of shorter life span changes results
Good luck!
Posted on 8/19/21 at 12:18 pm to VanJoe
take the 1M and invest it.
average returns of 7-8% will give you the following:
7% : 5833.00 per month for $70K a year
8% : 6666.66 per month for $80K a year
average returns of 7-8% will give you the following:
7% : 5833.00 per month for $70K a year
8% : 6666.66 per month for $80K a year
This post was edited on 8/19/21 at 12:19 pm
Posted on 8/19/21 at 12:50 pm to VanJoe
Are all yall forgetting that the lump sum is taxed immediately at ordinary income tax rates?
That makes a significant difference imo
That makes a significant difference imo
Posted on 8/19/21 at 1:08 pm to VanJoe
quote:
I can roll the 1 mil to an IRA account, and pay tax on the amount withdraw
Absolutely no brained to take the cash then
Posted on 8/19/21 at 1:11 pm to TigerDeBaiter
quote:
I can roll the 1 mil to an IRA account, and pay tax on the amount withdraw
quote:
Absolutely no brained to take the cash then
Yea I missed that lol. Yea take the milli easy
Posted on 8/19/21 at 1:48 pm to VanJoe
I'm assuming you can roll the $1M over into an IRA and take it out over time so that you don't take a huge upfront tax hit. Also, you may need to wait until you're 59.5 if you don't want to get hit with the 10% penalty.
Would you get a COLA increase on that $5k?
In the end if you can earn about 3-4% or so on your money and can roll it over, then you should go the IRA route. Of course, you'll then run the risk of running out of money if you live to 100.
Hell, if you can earn 6% over time, you'll not only get the $60K ($5k/month) back every year (assuming no COLA) but you'll leave your kids a $1 million IRA.
Would you get a COLA increase on that $5k?
In the end if you can earn about 3-4% or so on your money and can roll it over, then you should go the IRA route. Of course, you'll then run the risk of running out of money if you live to 100.
Hell, if you can earn 6% over time, you'll not only get the $60K ($5k/month) back every year (assuming no COLA) but you'll leave your kids a $1 million IRA.
This post was edited on 8/19/21 at 1:58 pm
Posted on 8/19/21 at 4:10 pm to thunderbird1100
quote:QYLD is designed to depreciate in value while you get those inordinate-sized yields. Stay away.
Heck, take it all, put $500k in QYLD,
Posted on 8/19/21 at 4:22 pm to VanJoe
quote:
I’m a heathy 58-year-old with no debt. My company pension plan gives me choice to take one-time lump sum of 1M or receive 5k per month until I die. What should I take?
You must be getting a pretty big haircut on that $1MM. The present value of a $5k/mth pension should be much higher than that. IRS rules, I assume, are killing you.
Posted on 8/19/21 at 4:28 pm to VanJoe
no brainer, take the million.
Posted on 8/19/21 at 5:29 pm to VanJoe
No question take the 1M
With a 6% avg return, you can take an income of $5,400 per month from age 60 to 90 and still have a nest egg of 500k left at 90.
6.5% would leave you with 900k left at age 90.
With a 6% avg return, you can take an income of $5,400 per month from age 60 to 90 and still have a nest egg of 500k left at 90.
6.5% would leave you with 900k left at age 90.
Posted on 8/19/21 at 5:31 pm to VanJoe
quote:
I’m a heathy 58-year-old with no debt. My company pension plan gives me choice to take one-time lump sum of 1M or receive 5k per month until I die. What should I take?
Well, this is easy. The 1M.
Posted on 8/19/21 at 8:15 pm to VanJoe
I agree, lump sum unless you are terrible at managing money. Also, know that increasing interests rates can significantly affect what you end up getting as a lump sum.
So much so that from the time you get the pension estimate to the time you file all the paperwork and it is processed can mean tens to hundreds of thousands of dollars cut in a lump sum distribution.
So much so that from the time you get the pension estimate to the time you file all the paperwork and it is processed can mean tens to hundreds of thousands of dollars cut in a lump sum distribution.
Posted on 8/19/21 at 9:01 pm to VanJoe
Lump sum
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