Help please. Being forced to retire early..

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Poisns1
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Help please. Being forced to retire early..

Post by Poisns1 »

I work for a fortune 30 Telecom company that is going to take my accrued retiree benefits away if I don't retire by the end of the year.

I can't afford to lose my health subsidy (will pay most of my health insurance premiums from retirement up to age 65) so I'm planning to leave by Dec 31 2021.

I'm so overwhelmed with leaving and the opinions of fellow employees to interview a bunch of retirement planners/fiduciaries. I've already had 2 interviews (Advance Capital and Edward Jones) and after the scenarios and fee structure provided, I'm even more confused and even afraid of the fact that I have to pick one and hope that they do the right thing with my future. They also charge at least 1% on the funds that they will manage for me.

So the details: I am 55, no debt whatsoever, own my home and personal vehicles. Wife is disabled and gets about 23,700 from SSI Disability. My 3 sources of income/savings below. I estimated that my yearly expenses will be close to 62K

1) Company is offering either lump sum or monthly annuity. Lump sum is around 764K and monthly full annuity about $3187/mo (joint and 50% survivor $2868/mo, joint and 75% $2709/mo). I have going back and forth on which one to take. Pro for the annuity is I shouldn't have to hire a planner and should have enough income right now to retire and be OK. Con, not as much to leave my wife and son if I pass early and company can take away or lessen payment if they don't do well in the future which is entirely possible. Pro for the Lump is I own the money and company can't take it away while any leftover will go directly to my wife and son. Con, if not invested properly, I stand to lose large portion or all if mis-managed and I will have to worry about the market performance.

2) 401k current value about 1.24M (Asset Allocation 2030 fund 15%, Total Return Bond 7%, Total US Stock (large cap) 12%, AT&T US Stock Fund (large cap 10%, International Stock Index 20%, Large Cap US Stock Index 16%, SM & MD US Stock 20%). I can take withdrawals from the 401k penalty free due to the rule of 55.

3) About 400 cash in personal savings.

4) My SS estimates:
Age 62: $2041/mo
Age 67: $2899/mo
Age 70: $3594/mo

My wife has been told that she will continue to get the disability payments she's getting now (adjusts for inflation) but will not be getting additional money whey she reaches retirement age, so currently $23,700/year.

The 2 firms mentioned above advised to select lump sum and roll both lump and my Company Fidelity 401k to an individual IRA. Also suggested to either invest my 400 cash savings and live off interest or just take straight withdrawals from that until about age 59.5 in addition to taking some money from the IRA or 401K to meet my income needs.

It took me 30 years to earn that cash and I don't want to invest it. I will use that to fund a new vehicle or 2, a few personal watercrafts etc., vacations and general large purchases needed through retirement as well as a safety net.

Advice, opinions on planners/fiduciaries and do I have any other option than to hire one and pay 1%+ to manage my money throughout my retirement?
Last edited by Poisns1 on Tue Mar 16, 2021 5:56 pm, edited 1 time in total.
Grt2bOutdoors
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Re: Help please. Being forced to retire early..

Post by Grt2bOutdoors »

Poisns1 wrote: Wed Mar 10, 2021 4:30 pm I work for a fortune 30 Telecom company that is going to take my accrued retiree benefits away if I don't retire by the end of the year.

I can't afford to lose my health subsidy (will pay most of my health insurance premiums from retirement up to age 65) so I'm planning to leave by Dec 31 2021.

I'm so overwhelmed with leaving and the opinions of fellow employees to interview a bunch of retirement planners/fiduciaries. I've already had 2 interviews (Advance Capital and Edward Jones) and after the scenarios and fee structure provided, I'm even more confused and even afraid of the fact that I have to pick one and hope that they do the right thing with my future. They also charge at least 1% on the funds that they will manage for me.

So the details: I am 55, no debt whatsoever, own my home and personal vehicles. Wife is disabled and gets about 23,700 from SSI Disability. My 3 sources of income/savings below. I estimated that my yearly expenses will be close to 62K

1) Company is offering either lump sum or monthly annuity. Lump sum is around 764K and monthly full annuity about $3187/mo (joint and 50% survivor $2868/mo, joint and 75% $2709/mo).

2) 401k current value about 1.24M (Asset Allocation 2030 fund 15%, Total Return Bond 7%, Total US Stock (large cap) 12%, AT&T US Stock Fund (large cap 10%, International Stock Index 20%, Large Cap US Stock Index 16%, SM & MD US Stock 20%). I can take withdrawals from the 401k penalty free due to the rule of 55.

3) About 400 cash in personal savings.

The 2 firms mentioned above advised to select lump sum and roll both lump and my Company Fidelity 401k to an individual IRA. Also suggested to either invest my 400 cash savings and live off interest or just take straight withdrawals from that until about age 59.5 in addition to taking some money from the IRA or 401K to meet my income needs.

It took me 30 years to earn that cash and I don't want to invest it. I will use that to fund a new vehicle or 2, a few personal watercrafts etc., vacations and general large purchases needed through retirement as well as a safety net.

Advice, opinions on planners/fiduciaries and do I have any other option than to hire one and pay 1%+ to manage my money throughout my retirement?
Edward Jones and Fiduciary do not belong in the same sentence. They are fiduciaries to themselves. Do you know why they want you to roll it over to them? To get their hands on your savings.

Have you spoken with Vanguard? They offer a Personal Advisory service for 0.30%. That’s a cost savings of nearly 70 percent over EJ and that other firm. Have you spoken with Fidelity Investments? Not sure what their fees are, but I don’t think it’s more than 1%.

Why did those two firms recommend taking the lump sum pension? Does your pension have a cost of living adjustment? With your estimated expenses and your wife’s income, I don’t see a retirement funding issue here.

Take your time, deep breath. It will be fine. There is no rush to make an immediate decision and if anyone is pressuring you, you need to RUN in the opposite direction. Your co-workers may mean well, but those two firms are not looking out for your best interest.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
yohac
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Re: Help please. Being forced to retire early..

Post by yohac »

Poisns1 wrote: Wed Mar 10, 2021 4:30 pm I've already had 2 interviews (Advance Capital and Edward Jones)
Don't ever talk to them again.

You can manage this yourself easily. Assuming the annuity is not inflation adjusted, I'd probably roll the lump sum into an IRA, perhaps a sensible balanced fund like Vanguard Life Strategy Moderate, and live off the cash as needed till 59.5.
Last edited by yohac on Wed Mar 10, 2021 4:49 pm, edited 1 time in total.
bryanm
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Re: Help please. Being forced to retire early..

Post by bryanm »

Okay, first thing: you're going to be okay. I assume when you say "400 cash" you mean 400k. If that's true, then your total assets right now are at least 1.64 million. Your estimated expenses are 62k a year, and you get ~$24k from SSI. That means you have a 38k gap. If you pulled that from your 1.64 million, it would be a ~2.5% withdrawal rate. Or, in other words, you could pull that for 40 years and be okay, even if you 401(k) returns nothing and you had no lump sum or annuity. You're doing fine.

(The above ignores taxes, but it also ignores things like your own social security. Bottom line, you're fine.)

Initial recommendations:
1) Don't pay 1% to a financial advisor. Just don't. If we assume your portfolio earns 4% a year, that's 25% of all your profits for the year. It's too much. Learn to DIY here on the forum, or at least hire someone who charges much less, preferably paying by the hour rather than a percentage of assets.

2) Decide on your asset allocation ('AA') and adjust your investments to match. Lot's of guidance on the forum on this. I know you said you didn't want to invest the 400k. Be aware that holding cash has it's own risk, because inflation reduces the value of cash every year. Unless you're purchasing something soon for sure, I recommend folding the 400k into your overall AA. Purchase toys on good stock market years :)

3) Decide to take the lump sum or annuity. I'll let others chime in on this as it's not clear to me. However, under either option I suspect you'll do great. EDIT: For this point, as you note above legacy is a consideration. Do your kids need an inheritance, and how important is that to you? When I was advising my parents as to a similar question, I strongly urged them to get the annuity. My siblings and I are doing great. I want them to enjoy their retirement and spend every dime without worrying too much. For that, the annuity was perfect.
Last edited by bryanm on Wed Mar 10, 2021 4:52 pm, edited 1 time in total.
DrCheese
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Re: Help please. Being forced to retire early..

Post by DrCheese »

You state that you need 62k a year. You are almost there, wife's disability is 23,700, monthly annuity at 2709 a month is 32,508 and interest 1% on your 400k a year is $4,000. You are at $60,208. It should not be a problem to cut your spending by $1800 a year.

This is also without touching any of your savings.
genzboglehead
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Re: Help please. Being forced to retire early..

Post by genzboglehead »

First things first: like bryanm and gr8tboutdoors said, take a breath. You have plenty of money. Congratulations on being a millionaire!

We can help you learn how to manage it and make sure you have a safe/happy retirement.

I'll follow up with more diving into the details in a bit.
Last edited by genzboglehead on Wed Mar 10, 2021 4:51 pm, edited 1 time in total.
hicabob
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Re: Help please. Being forced to retire early..

Post by hicabob »

Of course they want you to take the lump sum so they can get their greedy hands on it and take 2% of it per year. Generally keeping the pension is best and most pensions are guaranteed by the PBGC.
https://www.pbgc.gov/
Escapevelocity
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Re: Help please. Being forced to retire early..

Post by Escapevelocity »

Just curious. How did you decide on those two firms to start with?
Elena
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Re: Help please. Being forced to retire early..

Post by Elena »

If I had 400K liquid, I would invest it, then pay for cars and leisure devices from the eventual gains (divs. or capital). To me, having such amount sitting instead of producing would not be comfortable.
59Gibson
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Re: Help please. Being forced to retire early..

Post by 59Gibson »

I do not see a problem. Do you honestly see a problem? You mentioned buying "a new car or 2 and few personal watercrafts". Those items do not speak to concern of finances.
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retired@50
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Re: Help please. Being forced to retire early..

Post by retired@50 »

Poisns1 wrote: Wed Mar 10, 2021 4:30 pm
3) About 400 cash in personal savings.

The 2 firms mentioned above advised to select lump sum and roll both lump and my Company Fidelity 401k to an individual IRA. Also suggested to either invest my 400 cash savings and live off interest or just take straight withdrawals from that until about age 59.5 in addition to taking some money from the IRA or 401K to meet my income needs.

It took me 30 years to earn that cash and I don't want to invest it. I will use that to fund a new vehicle or 2, a few personal watercrafts etc., vacations and general large purchases needed through retirement as well as a safety net.

Advice, opinions on planners/fiduciaries and do I have any other option than to hire one and pay 1%+ to manage my money throughout my retirement?
Can we assume the "400 cash" is actually $400,000 or is it four hundred bucks?

Onward...
The 2 firms have already signaled their intentions by suggesting the lump sum distribution AND rolling the 401k balance into an IRA. This * might * be the decision you arrive at, but they have arrived at it for entirely different reasons. I suspect what they actually seek, is to get you into an assets under management type account with all $2 million of your dollars, so that they can pilfer $20,000 per year from your savings. 1% of $2 million is $20,000. Speaking of water-craft, can you guess what the adviser will be doing with the first $20,000 they take from you... :shock:

My advice would be to spend the next couple months learning about lump-sum distributions versus annuity payments. This is discussed in this forum quite often, so there are probably lots of old threads that will help teach you the nuances to consider when making this important decision.

With regard to the 401k plan, you can leave it where it is, or roll it over to an IRA at the financial institution of your choice. I'd also suggest you learn how to self-manage this account. If you're holding more than 5% of the account in company stock, I'd sell it to minimize your firm-specific risk and use the proceeds to buy a total stock market index fund.

If you decide to take the lump sum, you can also self-manage this money too. Once you do some reading and learn a bit about how simple it can be, you'll have the necessary confidence to handle things.

If you decide to have someone manage the money for you, as previously suggested, I'd go with Vanguard Personal Advisory Services. They are a much better deal than the 1% AUM advisers, and they won't put you into costly investments with high expense ratios.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
bryanm
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Re: Help please. Being forced to retire early..

Post by bryanm »

59Gibson wrote: Wed Mar 10, 2021 4:58 pm I do not see a problem. Do you honestly see a problem? You mentioned buying "a new car or 2 and few personal watercrafts". Those items do not speak to concern of finances.
Plans change when you're suddenly laid off, particularly when (as it appears is the case for the OP) you've been with a company for quite a long time.
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rob
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Re: Help please. Being forced to retire early..

Post by rob »

Have a look at the Vanguard PAS option.... far cheaper than either of those sharks (and I'm been unkind to sharks). You can find an hourly advisor to give you options for the pension... but n the end I think you covered the big differences and only you can decide. Seems to me that you would be ok if you can keep expenses under control but run some quick tests past something like firecalc and see if you feel comfortable.

Relax... lots of time to make a call... does not have to be sorted this week...

Edit: STOP TALKING TO SHARKS.... You will find one eventually with enough nice word to steal your money.
| Rob | Its a dangerous business going out your front door. - J.R.R.Tolkien
StrawMan
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Re: Help please. Being forced to retire early..

Post by StrawMan »

Poisns1 wrote: Wed Mar 10, 2021 4:30 pm
It took me 30 years to earn that cash and I don't want to invest it. I will use that to fund a new vehicle or 2, a few personal watercrafts etc., vacations and general large purchases needed through retirement as well as a safety net.
Someone is going to have fun, congratulations!
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JoeRetire
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Re: Help please. Being forced to retire early..

Post by JoeRetire »

Poisns1 wrote: Wed Mar 10, 2021 4:30 pm So the details: I am 55, no debt whatsoever, own my home and personal vehicles. Wife is disabled and gets about 23,700 from SSI Disability. My 3 sources of income/savings below. I estimated that my yearly expenses will be close to 62K
What do you expect to receive from Social Security?
Have you looked at https://opensocialsecurity.com/ ? Check it out. You'll likely find that your best bet is to delay claiming your benefits until 70.
1) Company is offering either lump sum or monthly annuity. Lump sum is around 764K and monthly full annuity about $3187/mo (joint and 50% survivor $2868/mo, joint and 75% $2709/mo). I have going back and forth on which one to take. Pro for the annuity is I shouldn't have to hire a planner and should have enough income right now to retire and be OK. Con, not as much to leave my wife and son if I pass early and company can take away or lessen payment if they don't do well in the future which is entirely possible. Pro for the Lump is I own the money and company can't take it away while any leftover will go directly to my wife and son. Con, if not invested properly, I stand to lose large portion or all if mis-managed and I will have to worry about the market performance.
Take the Lump Sum.
2) 401k current value about 1.24M (Asset Allocation 2030 fund 15%, Total Return Bond 7%, Total US Stock (large cap) 12%, AT&T US Stock Fund (large cap 10%, International Stock Index 20%, Large Cap US Stock Index 16%, SM & MD US Stock 20%). I can take withdrawals from the 401k penalty free due to the rule of 55.
Terrific.
3) About 400 cash in personal savings.{/quote]
Great.

It took me 30 years to earn that cash and I don't want to invest it. I will use that to fund a new vehicle or 2, a few personal watercrafts etc., vacations and general large purchases needed through retirement as well as a safety net.
Okay, so the $62k/year expense estimate does not include these toys?

You'll have over $2M in investable assets if you take the lump sum. If invested in a 60/40 or 50/50 asset allocation, it should be able to throw off more money than you will ever need for the rest of your life when combined with SSI and social security retirement benefits.

If you aren't comfortable doing the investing yourself, you can get hourly advice from a fee-only fiduciary financial advisor. Start here: https://www.letsmakeaplan.org/

Also note that you likely aren't being forced to retire - just forced to retire from this particular job if you want to keep your retirement benefits. Get the lump sum, then decide if you want to work elsewhere or not. Since you are financially independent, you can choose a job that interests you, without regard to the income it generates. Some folks enjoy working at a lower-income job in a field that interests them, some enjoy working part-time, some enjoy volunteering their time instead.

Relax. You are financially independent. Enjoy! Do whatever makes you happy. You've earned it.
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milktoast
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Re: Help please. Being forced to retire early..

Post by milktoast »

I put 768k into https://www.immediateannuities.com with some guesses and got pretty similar annuity quotes. You might want to put in some accurate information and see if you think what you are being offered is competitive with market rates. Doesn't answer whether you should roll over, but if it is well above market that's a hint you should keep it.
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Kenkat
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Re: Help please. Being forced to retire early..

Post by Kenkat »

I would look to get some clarification on these two statements which as I understand it would be illegal actions on the part of the company:

I work for a fortune 30 Telecom company that is going to take my accrued retiree benefits away if I don't retire by the end of the year.

Accrued and vested retiree benefits cannot be taken away. They can freeze any future benefits, but benefits already earned are yours.

...company can take away or lessen [pension] payment if they don't do well in the future which is entirely possible.

Once the pension is annuitized, it cannot be changed by the pension plan.

I’d still probably plan on leaving but it’s worth knowing your rights on the way out the door.
EdNorton
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Re: Help please. Being forced to retire early..

Post by EdNorton »

hicabob wrote: Wed Mar 10, 2021 4:51 pm Of course they want you to take the lump sum so they can get their greedy hands on it and take 2% of it per year. Generally keeping the pension is best and most pensions are guaranteed by the PBGC.
https://www.pbgc.gov/
Agree vehemently. :sharebeer
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sergeant
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Re: Help please. Being forced to retire early..

Post by sergeant »

You joined Bogleheads four years ago and went to Edward Jones. You should definitely go with the annuity. Once it kicks in I don't see how it can be reduced by your ex employer?

You have enough assets so no need to panic. Spend the next few months figuring things out. Don't make any big financial moves until you have a handle on things.
For the ashes of his fathers, And the temples of his gods. | Pensions= 2X yearly expenses. Portfolio= 40X yearly expenses.
genzboglehead
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Re: Help please. Being forced to retire early..

Post by genzboglehead »

You are in the right place!

In general, around here, people self-manage their investments. You are working through the end of the year. That means you have around 8-9 months to do some learning and feel comfortable making a good decision. Take your time!

Good advice abounds here and it’s free! Many of us like thinking about this stuff and love sharing what we know. Know that we’ve answered a lot of the same questions over and over again - but that doesn’t mean you should be afraid of asking it! Bogleheads are happy to answer, especially if it helps someone avoid Edward Jones, who is infamous on this site for high-fee funds that extract value from you rather than provide it.

So, the details.

You’ve estimated your expenses at 62k.

If you take the lump sum and use Vanguard PAS, that puts you at 2 million is assets. Even if you had no other income, pulling 62k out of a 2m portfolio is just above 3%. That is considered a VERY conservative withdrawal rate. I know many non-profits who pull from their endowments (that are supposed to last forever) at 4.5-5%. In general, safety is anything below 4%.

But between your wife’s SSI Disability and your pension if you don’t take it lump sum, you have ($23,700 + $3187*12) = $61,944. Congrats! You have this fantastic pension that means you don’t even have to think about it.

If market performance is something you don’t want to have to worry about, just take the pension! In terms of which option (no survivor, 50% etc) Estimate your wife’s expenses on her own. Also, think about your own health and family history of medical issues. These will be some of the things to think about when it comes to which pension you take. If you’re worried about any of these factors, take the 75% and be done with it. Pull the little bit of extra you need out of your 401k every year and you’re good! If you're worried about your company for some reason, then take a look at the annuities that another poster mentioned above.

You have done a FANTASTIC job saving. You’ve been adding for many years. It’s a scary mindset switch, but now it’s time to think about a withdrawal strategy.

It’s hard to tell how much you know, so if I were you I’d commit to doing nothing for the next 5 months. Just spend the next 5 months reading. Read bogleheads. Read John Bogle’s Common Sense on Mutual Funds and Little Book of Common Sense Investing. Read The Simple Path to Wealth by JL Collins (really great for an understanding of the markets in general). Read the wiki on withdrawal strategy and taxes. https://www.bogleheads.org/wiki/Withdrawal_methods

Get a better feel for what kinds of actions you can take, and then come back here with some more specific questions because you’re going to be fine!
prd1982
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Re: Help please. Being forced to retire early..

Post by prd1982 »

You are getting multiple opinions here that you should review. However, notice that we are all saying to avoid these "financial advisors". They are sales people, plain and simple. As already stated, they don't like the annuity because they make their money based on what you invest with them.

I want to talk about the annuity. I would not buy an annuity on the open market. But I'm assuming your Telcom company has contracted for an annuity that pays better than one you could get on the open market because they eliminate the sales commission, which is huge. Hopefully someone on this thread will confirm.

So I think you should seriously consider the annuity. You are concerned that company can take away the annuity if they don't do well. That is not true. Assuming the company is paying the annuity (ie. pension), the govt will pick it up if the company goes out of business.

Now they gave you 3 options for the annuity:

* Stops when you die. Don't take it. That would leave your wife in trouble if you died before her (which statistically is what will happen).

* 50%. I would suggest you not take it. If you die, the wife will not need as much income as the 2 of you need. But 50% is a significant reduction.

* 75%. That is the one I would pick. This should let your wife have the same financial lifestyle.

As someone mentioned, there is one downside -- The pension will not increase with inflation. So over time, its value will decrease. I would assume it will decrease in VALUE (not amount) by 2% a year.

You did not mention Social Security, which will add a lot to your income, and it will keep pace with general inflation. I would suggest deferring it until at least your full retirement age of 66. Remember, if you die, your wife will get your SS, so deferring will give her a larger monthly check.

One last thing. You should mention this thread to your buddies. Perhaps one or two of them will buy you a drink for saving them so much money.
tibbitts
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Re: Help please. Being forced to retire early..

Post by tibbitts »

Kenkat wrote: Wed Mar 10, 2021 5:24 pm I would look to get some clarification on these two statements which as I understand it would be illegal actions on the part of the company:

I work for a fortune 30 Telecom company that is going to take my accrued retiree benefits away if I don't retire by the end of the year.

Accrued and vested retiree benefits cannot be taken away. They can freeze any future benefits, but benefits already earned are yours.

...company can take away or lessen [pension] payment if they don't do well in the future which is entirely possible.

Once the pension is annuitized, it cannot be changed by the pension plan.

I’d still probably plan on leaving but it’s worth knowing your rights on the way out the door.
I'm guessing the issue is subsidized healthcare and I'm also guessing that could be taken away. I can't explain the "do well in the future" unless there is some pension "additional amount" based on performance - maybe like TIAA.
tibbitts
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Re: Help please. Being forced to retire early..

Post by tibbitts »

Question for the OP: did you act on the recommendations provided to you here four years ago?
jrbdmb
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Re: Help please. Being forced to retire early..

Post by jrbdmb »

Poisns1 wrote: Wed Mar 10, 2021 4:30 pm I work for a fortune 30 Telecom company that is going to take my accrued retiree benefits away if I don't retire by the end of the year.

I can't afford to lose my health subsidy (will pay most of my health insurance premiums from retirement up to age 65) so I'm planning to leave by Dec 31 2021.
I am reading this as the company will pay your health benefits up to age 65 if you choose to retire before the end of the year. That's a great benefit, and I can see why you would take advantage of it. Was this something you already earned due to age or service time, or is it an incentive put in place to get employees to retire? Are you limited in seeking employment elsewhere if you choose to retire now?
1) Company is offering either lump sum or monthly annuity. Lump sum is around 764K and monthly full annuity about $3187/mo (joint and 50% survivor $2868/mo, joint and 75% $2709/mo). I have going back and forth on which one to take. Pro for the annuity is I shouldn't have to hire a planner and should have enough income right now to retire and be OK. Con, not as much to leave my wife and son if I pass early and company can take away or lessen payment if they don't do well in the future which is entirely possible.
For other members of this forum, is this a real possibility? Freezing pensions is a common thing, but short of Enron-style malfeasance how much are we in danger of losing pension benefits if our company starts to struggle?
MathWizard
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Re: Help please. Being forced to retire early..

Post by MathWizard »

Suggestions:

Keep the pension.

Invest yourself, or use the $400K in savings to bridge the gap.

You have well over a million in 401k + IRA , probably in tax deferred.
I would suggest to convert enough to get to the top of the 12% bracket
while it lasts, and live off the 400K in savings, though I would make sure
you have made IRA contributions for this year (and last year if you have not already,
since you have until Apr 15th to do so for last year).

This way, you will have money in tax advantaged as much as possible, and
getting money into ROTH while you pay a low tax rate is a tax savings strategy.

But in any case, I think you will be OK. Make sure you have health insurance.
palanzo
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Re: Help please. Being forced to retire early..

Post by palanzo »

sergeant wrote: Wed Mar 10, 2021 5:26 pm You joined Bogleheads four years ago and went to Edward Jones. You should definitely go with the annuity. Once it kicks in I don't see how it can be reduced by your ex employer?

You have enough assets so no need to panic. Spend the next few months figuring things out. Don't make any big financial moves until you have a handle on things.
I see how they could take away the annuity. This is a fortune 30 Telecom company that is going to take his/her accrued retiree benefits away if he/she doesn't retire by the end of the year.

How can they even do this legally?
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Watty
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Re: Help please. Being forced to retire early..

Post by Watty »

Poisns1 wrote: Wed Mar 10, 2021 4:30 pm They also charge at least 1% on the funds that they will manage for me.
That is just the tip of the iceberg and they will likely try to also get you to invest in expensive mutual funds that may have expenses that are at least 1% to high or even have loads.

They may also try to get you to invest in some complex annuity or life insurance as an investment. Run if they suggest that, they are trying to rip you off.

For argument though even just one percent is still a huge problem. The reason is that academic studies have shown that someone who retires at 65 would likely be OK is they started out with about a 4% safe withdrawal rate(SWR). There are all sorts of qualification and assumptions but that also assume that you are 65 and planning a 30 year retirement. Since you are younger your SWR would be more like 3 to 3.5 percent because you would have a longer retirement.

https://www.bogleheads.org/wiki/Safe_withdrawal_rates

The reason this the 1% is a problem is that even if your SWR is 4% the 1% fee would need to come out of that so you would be paying then 25% if your income each year. Most likely with all the other fees you would be paying a lot more than 1%.

You are looking really good though. If you took the lump sum you would have roughly $2.4 million dollars plus a paid off house. A 3% withdrawal rate would give you $72K a year and you would also get your wife's disability and eventually Social Security.

It does not sound like you would need to make any big decisions right away so it would be good to defer making any big decisions for a while.

In the meantime there is a getting started wiki that you could read.

https://www.bogleheads.org/wiki/Getting_started

The Boglehead books are also very readable for someone that does not have a background in investing.

https://www.amazon.com/s?k=Bogleheads&t ... ads.org-20

Something you did not mention is how much retirement Social Security you and your wife will get.

You can get the amounts from the Social Security website and then use this website to see what it suggests for a claiming strategy, but it will not take your wife's disability into account so you may want to just use that as a starting point.

https://opensocialsecurity.com/
prd1982
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Re: Help please. Being forced to retire early..

Post by prd1982 »

palanzo wrote: Wed Mar 10, 2021 6:13 pm
I see how they could take away the annuity. This is a fortune 30 Telecom company that is going to take his/her accrued retiree benefits away if he/she doesn't retire by the end of the year.
They can take away medical, but not the money. I also want to point out that they can drop the medical benefit after he retires. Hopefully they will not.
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Poisns1
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Re: Help please. Being forced to retire early..

Post by Poisns1 »

Wow. Thanks so much for all the advice so far. I'm already breathing better, no joke!

I forgot to put my SS estimates:
Age 62: $2041/mo
Age 67: $2899/mo
Age 70: $3594/mo

As I understand it my wife's disability is inflation adjusted and she will remain getting it since she's totally disabled but will not get another payment or additional money once she reaches retirement age (62, 67 or 70). She is currently 54.

Also to answer the question asked:
Question for the OP: did you act on the recommendations provided to you here four years ago?
Yes I did. I used the recommendations to pick the funds for my wife's rollover 401k

"They can take away medical, but not the money. I also want to point out that they can drop the medical benefit after he retires. Hopefully they will not."
Exactly! They don't have to continue offering the retiree health subsidy. They also drastically reduced the CAM (pension and annuity retiree payout amount) starting Jan 2022 if you don't retire. See the trend here? They can take away my health benefit right after I retire. I thought about staying at the company for this reason but there is no guarantee at all in my position and I could likely be laid of shortly after Jan 2022, so thought I'd lock in the health subsidy and hope they don't cut it.
Last edited by Poisns1 on Tue Mar 16, 2021 5:54 pm, edited 4 times in total.
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Wiggums
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Re: Help please. Being forced to retire early..

Post by Wiggums »

My wife’s company, not telecom, is eliminating retiree medical for those under 40. They also are eliminating retiree life insurance after 12/31 so she is going to retire this year.
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Outer Marker
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Re: Help please. Being forced to retire early..

Post by Outer Marker »

Relax. You're fine.

I'd keep the annuity and delay taking SS to age 70. Since you're retiring young, assuming relatively good health, I'd take the full single life benefit. Your wife would likely get additional SS survivor benefits, though I haven't researched it. You might consider a 10 year term policy if you're concerned. Assuming decent heath a 10 year $500K policy would cost you about $900/yr vs. the $5,700 a year you'd be giving up in benefits by going with the 75% survivor option.

As others have said, stay far, far away from the financial houses you've named. You should already know better if you've been on Bogleheads!

Now that you've got extra time on your hands, read up on investing and spend a little time hanging out here for fun. You'll be better qualified that most paid financial advisors.
palanzo
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Re: Help please. Being forced to retire early..

Post by palanzo »

prd1982 wrote: Wed Mar 10, 2021 6:28 pm
palanzo wrote: Wed Mar 10, 2021 6:13 pm
I see how they could take away the annuity. This is a fortune 30 Telecom company that is going to take his/her accrued retiree benefits away if he/she doesn't retire by the end of the year.
They can take away medical, but not the money. I also want to point out that they can drop the medical benefit after he retires. Hopefully they will not.
The OP said accrued retiree benefits. He/she did not mention medical. In other cases financial benefits have been taken away.
palanzo
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Re: Help please. Being forced to retire early..

Post by palanzo »

Poisns1 wrote: Wed Mar 10, 2021 6:49 pm Wow. Thanks so much for all the advice so far. I'm already breathing better, no joke!

The company I work for is widely known on Wall Street for having on the BIGGEST debt sheets (approx. 170 billion). That is why they are cutting management even more aggressively now than in previous years, reducing salaries, and taking away health subsidy benefits from current employees if they don't retire by Jan 2022. I can't justify paying my health benefits out of my own pocket in retirement, especially since I just accrued the benefit with 30 years so that is why I state "forced to retire." They just reduced my salary this year by 16K, it's almost criminal but they have lots of lawyers and believe me when I tell you everything they do is legally allowed or they wouldn't do it. They sent multiple emails explaining that they compared themselves to other companies like Google (non Telecom companies at that!) and decided to scale back or take away those benefits like pension and retiree health benefits because their competitors simply don't offer them! Well that is exactly why employees like myself dedicated their entire career to working for them because of those pension and retiree benefits! Now they are slowly taking everything away. If you haven't guessed the company, it starts with and A and contains 4 characters A***. To make matters worse our directors just announced that they are retaining our previously retired CEO (rhymes with "Panky") that ran the company into the ground for his "consulting services." What a joke right? The same guy that made mistake over mistake to plunge us into 170B in debt. That is why I'm afraid to take the monthly annuity although it looks so appealing.

I forgot to put my SS estimates:
Age 62: $2041/mo
Age 67: $2899/mo
Age 70: $3594/mo

As I understand it my wife's disability is inflation adjusted and she will remain getting it since she's totally disabled but will not get another payment or additional money once she reaches retirement age (62, 67 or 70). She is currently 54.

Also to answer the question asked:
Question for the OP: did you act on the recommendations provided to you here four years ago?
Yes I did. I used the recommendations to pick the funds for my wife's rollover 401k

"They can take away medical, but not the money. I also want to point out that they can drop the medical benefit after he retires. Hopefully they will not."
Exactly! They don't have to continue offering the retiree health subsidy. They also drastically reduced the CAM (pension and annuity retiree payout amount) starting Jan 2022 if you don't retire. See the trend here? They can take away my health benefit right after I retire. I thought about staying at the company for this reason but there is no guarantee at all in my position and I could likely be laid of shortly after Jan 2022, so thought I'd lock in the health subsidy and hope they don't cut it.
I thought you were referring to Comcrap but it seems you are referring to AT&T.

I would carefully consider taking an annuity from this kind of company. Perhaps taking the lump sum and investing your self would be safer.
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Wiggums
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Re: Help please. Being forced to retire early..

Post by Wiggums »

palanzo wrote: Wed Mar 10, 2021 7:21 pm
I thought you were referring to Comcrap but it seems you are referring to AT&T.

I would carefully consider taking an annuity from this kind of company. Perhaps taking the lump sum and investing your self would be safer.
The pension annuity is issued by an insurance company and not the employer.

There are pros and cons to taking a lumpsum. A person who will not properly invest the money should strongly consider an annuity that covers the couples lifetime.
"I started with nothing and I still have most of it left."
prd1982
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Re: Help please. Being forced to retire early..

Post by prd1982 »

palanzo wrote: Wed Mar 10, 2021 7:21 pm I would carefully consider taking an annuity from this kind of company. Perhaps taking the lump sum and investing your self would be safer.
While the OP said annuity, I assume we really are talking about a pension. These are backed by the Pension Benefit Guaranty Corporation, a US Government Agency, up to a level that exceeds what the OP is getting. Please lets not scare the OP, or give him false information. If you know of a employer pension plan that didn't continue to pay out (or payed by the government in case of a failure), please tell us the plan that failed.

As to your other quote, lets keep politics out of this.
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Re: Help please. Being forced to retire early..

Post by palanzo »

Wiggums wrote: Wed Mar 10, 2021 7:33 pm
palanzo wrote: Wed Mar 10, 2021 7:21 pm
I thought you were referring to Comcrap but it seems you are referring to AT&T.

I would carefully consider taking an annuity from this kind of company. Perhaps taking the lump sum and investing your self would be safer.
The pension annuity is issued by an insurance company and not the employer.

There are pros and cons to taking a lumpsum. A person who will not properly invest the money should strongly consider an annuity that covers the couples lifetime.
Which insurance company? Do you trust AT&T and the insurance company?
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Re: Help please. Being forced to retire early..

Post by nix4me »

If it were me, i'd keep the 400K cash, take the lump sum and put everything except the 400 cash in VTI. Then i'd retire. You only need about 2-3% to cover expenses. Sell stock when stocks are high and use cash when stocks are low for your yearly withdrawals. Id put it in Fidelity or Schwab or Vanguard.
palanzo
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Re: Help please. Being forced to retire early..

Post by palanzo »

nix4me wrote: Wed Mar 10, 2021 7:39 pm If it were me, i'd keep the 400K cash, take the lump sum and put everything except the 400 cash in VTI. Then i'd retire. You only need about 2-3% to cover expenses. Sell stock when stocks are high and use cash when stocks are low for your yearly withdrawals. Id put it in Fidelity or Schwab or Vanguard.
Agreed. I would not trust AT&T or the insurance company.
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Re: Help please. Being forced to retire early..

Post by Outer Marker »

nix4me wrote: Wed Mar 10, 2021 7:39 pm If it were me, i'd keep the 400K cash, take the lump sum and put everything except the 400 cash in VTI. Then i'd retire. You only need about 2-3% to cover expenses. Sell stock when stocks are high and use cash when stocks are low for your yearly withdrawals. Id put it in Fidelity or Schwab or Vanguard.
That is really dangerous and irresponsible advice. Don't do it. You are financially well situated have no need to take on extreme risk in the stock market.
palanzo
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Re: Help please. Being forced to retire early..

Post by palanzo »

Outer Marker wrote: Wed Mar 10, 2021 7:44 pm
nix4me wrote: Wed Mar 10, 2021 7:39 pm If it were me, i'd keep the 400K cash, take the lump sum and put everything except the 400 cash in VTI. Then i'd retire. You only need about 2-3% to cover expenses. Sell stock when stocks are high and use cash when stocks are low for your yearly withdrawals. Id put it in Fidelity or Schwab or Vanguard.
That is really dangerous and irresponsible advice. Don't do it. You are financially well situated have no need to take on extreme risk in the stock market.
Who is providing the pension?
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Mlm
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Re: Help please. Being forced to retire early..

Post by Mlm »

You need to think about your needs and your goals in retirement.

Take the lump sum if you want to leave an inheritance or desire inflation protection. You will be taking on some risk.
Take the annuity if you don't want any market risk and are willing to sacrifice inflation protection.

Looks like you are in good shape either way.

Everyone I know that when presented with a choice chose the lump sum. The next choice would be if you want to manage it yourself or you want to hire (pay, pay, pay) someone to do it for you.
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Wiggums
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Re: Help please. Being forced to retire early..

Post by Wiggums »

Poisns1 wrote: Wed Mar 10, 2021 4:30 pm I work for a fortune 30 Telecom company that is going to take my accrued retiree benefits away if I don't retire by the end of the year.

I can't afford to lose my health subsidy (will pay most of my health insurance premiums from retirement up to age 65) so I'm planning to leave by Dec 31 2021.

I'm so overwhelmed with leaving and the opinions of fellow employees to interview a bunch of retirement planners/fiduciaries. I've already had 2 interviews (Advance Capital and Edward Jones) and after the scenarios and fee structure provided, I'm even more confused and even afraid of the fact that I have to pick one and hope that they do the right thing with my future. They also charge at least 1% on the funds that they will manage for me.

So the details: I am 55, no debt whatsoever, own my home and personal vehicles. Wife is disabled and gets about 23,700 from SSI Disability. My 3 sources of income/savings below. I estimated that my yearly expenses will be close to 62K

1) Company is offering either lump sum or monthly annuity. Lump sum is around 764K and monthly full annuity about $3187/mo (joint and 50% survivor $2868/mo, joint and 75% $2709/mo). I have going back and forth on which one to take. Pro for the annuity is I shouldn't have to hire a planner and should have enough income right now to retire and be OK. Con, not as much to leave my wife and son if I pass early and company can take away or lessen payment if they don't do well in the future which is entirely possible. Pro for the Lump is I own the money and company can't take it away while any leftover will go directly to my wife and son. Con, if not invested properly, I stand to lose large portion or all if mis-managed and I will have to worry about the market performance.

2) 401k current value about 1.24M (Asset Allocation 2030 fund 15%, Total Return Bond 7%, Total US Stock (large cap) 12%, AT&T US Stock Fund (large cap 10%, International Stock Index 20%, Large Cap US Stock Index 16%, SM & MD US Stock 20%). I can take withdrawals from the 401k penalty free due to the rule of 55.

3) About 400 cash in personal savings.

The 2 firms mentioned above advised to select lump sum and roll both lump and my Company Fidelity 401k to an individual IRA. Also suggested to either invest my 400 cash savings and live off interest or just take straight withdrawals from that until about age 59.5 in addition to taking some money from the IRA or 401K to meet my income needs.

It took me 30 years to earn that cash and I don't want to invest it. I will use that to fund a new vehicle or 2, a few personal watercrafts etc., vacations and general large purchases needed through retirement as well as a safety net.

Advice, opinions on planners/fiduciaries and do I have any other option than to hire one and pay 1%+ to manage my money throughout my retirement?
You are 55. If you roll the money from the 401k to an IRA, you are subject to IRA rules.

You need to identify your sources of retirement income and acknowledge that you owe taxes on Pretax accounts. IRA’s are subject to a penalty (plus the tax) if you take out the money before age 59.5.

My advice would be to spend the next couple months learning about lump-sum distributions versus annuity payments. this is an important decision. If you take the lump-sum, you need to carefully manage that money, both for you and your wife’s lifetime. If some happens to you, there has to be a plan. Is you wife financially savy? You need a financial plan which includes how you will access the money in a tax efficient manner. You need a plan for RMDs.
Last edited by Wiggums on Wed Mar 10, 2021 8:09 pm, edited 1 time in total.
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Poisns1
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Re: Help please. Being forced to retire early..

Post by Poisns1 »

Outer Marker wrote: Wed Mar 10, 2021 7:44 pm
nix4me wrote: Wed Mar 10, 2021 7:39 pm If it were me, i'd keep the 400K cash, take the lump sum and put everything except the 400 cash in VTI. Then i'd retire. You only need about 2-3% to cover expenses. Sell stock when stocks are high and use cash when stocks are low for your yearly withdrawals. Id put it in Fidelity or Schwab or Vanguard.
That is really dangerous and irresponsible advice. Don't do it. You are financially well situated have no need to take on extreme risk in the stock market.
This appealed to me since it sounded so easy. Alas I understand this is taking way more risk than I'd be comfortable with being in only 1 fund and weighted heavily toward stocks.

To answer the question, I believe that Fidelity pays the monthly annuity/pension since they also provide the 401k service, but I'm not completely positive on this as I haven't retired yet.

I am now leaning towards taking the pension, rolling into an IRA and managing myself, as long as I have advice and support from an excellent forum like this.

My company 401K is with Fidelity and as long as I leave it there, I can take withdrawals from that account penalty free due to the rule of 55. For that reason I was going to leave my 401k as is with Fidelity for the next several years at least.

So I already have an TD/Ameritrade account that I used in the past to buy and sell individual stocks. Can I use that account or does it have to be a specific "retirement/IRA" account to roll lump sump retirement funds to? If I need to open a separate IRA/Retirement account, should I use TD/Ameritrade or someone else with cheaper fees?

Is it too early to ask what kind of funds and allocation rates I should do if I were to take the Lump Sum and rollover to an IRA?
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Re: Help please. Being forced to retire early..

Post by Outer Marker »

I think you are getting ahead of yourself.

What are your reasons for giving up a guaranteed income stream for life vs. self-managed investments?

Why do you want to roll money into an IRA that has distribution restrictions in your 50's whereas 401K's and pension distributions do not?

Why do you think companies are freezing and/or terminating defined-benefit plans in favor of defined contribution plans? Hint . . . It may be that pensions are a better deal for employees and worse for companies . . .

Take a good, long time to think this over. Once you lump sum it, you're stuck with the decision.

If you do decide to lump sum the pension money (which I would not advise) an all-in-one fund like Vanguard Lifestrategy Moderate Growth (60/40 AA) might be appropriate, particuarly as you're learning the ropes with investments. I would use either Vanguard or Fidelity as your primary brokerage.
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Wiggums
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Re: Help please. Being forced to retire early..

Post by Wiggums »

Poisns1 wrote: Wed Mar 10, 2021 8:08 pm
Outer Marker wrote: Wed Mar 10, 2021 7:44 pm
nix4me wrote: Wed Mar 10, 2021 7:39 pm If it were me, i'd keep the 400K cash, take the lump sum and put everything except the 400 cash in VTI. Then i'd retire. You only need about 2-3% to cover expenses. Sell stock when stocks are high and use cash when stocks are low for your yearly withdrawals. Id put it in Fidelity or Schwab or Vanguard.
That is really dangerous and irresponsible advice. Don't do it. You are financially well situated have no need to take on extreme risk in the stock market.
This appealed to me since it sounded so easy. Alas I understand this is taking way more risk than I'd be comfortable with being in only 1 fund and weighted heavily toward stocks.

To answer the question, I believe that Fidelity pays the monthly annuity/pension since they also provide the 401k service, but I'm not completely positive on this as I haven't retired yet.

I am now leaning towards taking the pension, rolling into an IRA and managing myself, as long as I have advice and support from an excellent forum like this.

So I already have an TD/Ameritrade account that I used in the past to buy and sell individual stocks. Can I use that account or does it have to be a specific "retirement/IRA" account to roll lump sump retirement funds to? If I need to open a separate IRA/Retirement account, should I use TD/Ameritrade or someone else with cheaper fees?

Is it too early to ask what kind of funds and allocation rates I should do if I were to take the Lump Sum and rollover to an IRA?
A pension annuity will provide floor income. Building on the floor, you will have social security at some point — income you can count on, with cost of living increases. Retiree medical is another great benefit. You won’t need to shop for insurance and likely you will pay something close to the employee rate.

I hold the three fund portfolio. Another alternative is to Consider an all in one fund such as vanguard life strategy. The three fun portfolio it’s a little more tax efficient when you put the bonds in a pre-tax account. The Vanguard life strategy fund it’s actually The four fund portfolio. There is really no reason to pay an advisor high fees Which is based on your $2 million account balance on an annual basis. A more cost efficient solution would be to use a fee only advisor, who will work with you to develop a financial plan.

The middle ground between doing it yourself and having assets under management with an advisor who charges high fees, is something like Vanguard professional services which costs .3%. Vanguard is not the only broker that offers this type of service. Typically they would put you in funds similar to the Vanguard life strategy fund. You can cancel the service at any time.

The folks on this forum do you not like advisers who charge high fees and put you into a lot of proprietary funds. Should you ever want to leave the advisor to save money on fees, you will be forced to sell the proprietary funds in order to move them to another broker. If this were a taxable account, selling the proprietary funds will be taxable events. This makes it harder to unwind your positions.

You can go to the immediate annuities website and see if the lumpsum is a good deal. Remember that the pension annuity covers both your life and the life of your spouse. Compare the annuity amount being offered to you with the ones currently available in the marketplace. It is likely that the pension annuity Being offered to you is a better deal.

A lump sum Payout certainly has benefits if you want to leave a legacy. You will need to check with your employer, but lump sum payment might be put into an IRA and not handed to you in cash.
Last edited by Wiggums on Wed Mar 10, 2021 8:46 pm, edited 6 times in total.
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Re: Help please. Being forced to retire early..

Post by firebirdparts »

Take the lump, you’re rich. You may live 40 years and There is every possibility they’ll default before you expire. Invest self-directed in something simple and enjoy life. Some people may argue the PBGC will save your bacon, but you get the money now just by holding out your hand.
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Re: Help please. Being forced to retire early..

Post by NabSh »

So taking annuity over lump sum risk is a risk. I know someone personally who died at 57, 2 years after he took retirement. My suggestion is to look into getting a 20 year term life that will cover the risk of you leaving less money for your family.
A professional investment advisor would usually recommend taking lump sum because it means more money for them to invest.

My 2 cents...
Poisns1 wrote: Wed Mar 10, 2021 4:30 pm I work for a fortune 30 Telecom company that is going to take my accrued retiree benefits away if I don't retire by the end of the year.

I can't afford to lose my health subsidy (will pay most of my health insurance premiums from retirement up to age 65) so I'm planning to leave by Dec 31 2021.

I'm so overwhelmed with leaving and the opinions of fellow employees to interview a bunch of retirement planners/fiduciaries. I've already had 2 interviews (Advance Capital and Edward Jones) and after the scenarios and fee structure provided, I'm even more confused and even afraid of the fact that I have to pick one and hope that they do the right thing with my future. They also charge at least 1% on the funds that they will manage for me.

So the details: I am 55, no debt whatsoever, own my home and personal vehicles. Wife is disabled and gets about 23,700 from SSI Disability. My 3 sources of income/savings below. I estimated that my yearly expenses will be close to 62K

1) Company is offering either lump sum or monthly annuity. Lump sum is around 764K and monthly full annuity about $3187/mo (joint and 50% survivor $2868/mo, joint and 75% $2709/mo). I have going back and forth on which one to take. Pro for the annuity is I shouldn't have to hire a planner and should have enough income right now to retire and be OK. Con, not as much to leave my wife and son if I pass early and company can take away or lessen payment if they don't do well in the future which is entirely possible. Pro for the Lump is I own the money and company can't take it away while any leftover will go directly to my wife and son. Con, if not invested properly, I stand to lose large portion or all if mis-managed and I will have to worry about the market performance.

2) 401k current value about 1.24M (Asset Allocation 2030 fund 15%, Total Return Bond 7%, Total US Stock (large cap) 12%, AT&T US Stock Fund (large cap 10%, International Stock Index 20%, Large Cap US Stock Index 16%, SM & MD US Stock 20%). I can take withdrawals from the 401k penalty free due to the rule of 55.

3) About 400 cash in personal savings.

The 2 firms mentioned above advised to select lump sum and roll both lump and my Company Fidelity 401k to an individual IRA. Also suggested to either invest my 400 cash savings and live off interest or just take straight withdrawals from that until about age 59.5 in addition to taking some money from the IRA or 401K to meet my income needs.

It took me 30 years to earn that cash and I don't want to invest it. I will use that to fund a new vehicle or 2, a few personal watercrafts etc., vacations and general large purchases needed through retirement as well as a safety net.

Advice, opinions on planners/fiduciaries and do I have any other option than to hire one and pay 1%+ to manage my money throughout my retirement?
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Re: Help please. Being forced to retire early..

Post by mkc »

Poisns1 wrote: Wed Mar 10, 2021 4:30 pm
I'm so overwhelmed with leaving and the opinions of fellow employees to interview a bunch of retirement planners/fiduciaries. I've already had 2 interviews (Advance Capital and Edward Jones) and after the scenarios and fee structure provided, I'm even more confused and even afraid of the fact that I have to pick one and hope that they do the right thing with my future.
No, no, no to either of these.

You do NOT have to choose one of these 2, and please do not. They are both predatory and will not do the right thing for your future. They are all about *theirs*. And not Morgan Stanley, Raymond James, Merrill Lynch, etc.

Look at Fidelity, Vanguard, and Schwab as the primary options. Even if you opt not to DIY, all three have options that are significantly more aligned with your interest that the ones you have talked to already.
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Watty
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Re: Help please. Being forced to retire early..

Post by Watty »

Poisns1 wrote: Wed Mar 10, 2021 6:49 pm As I understand it my wife's disability is inflation adjusted and she will remain getting it since she's totally disabled but will not get another payment or additional money once she reaches retirement age (62, 67 or 70). She is currently 54.
I know little about SSDI but I would think that she would get a Social Security retirement benefit then. It would be good to research the details of that to figure out what she would get then.
Poisns1 wrote: Wed Mar 10, 2021 4:30 pm Company is offering either lump sum or monthly annuity. Lump sum is around 764K and monthly full annuity about $3187/mo (joint and 50% survivor $2868/mo, joint and 75% $2709/mo). I have going back and forth on which one to take.
Something to check on is that sometimes other retirement benefits, like healthcare, are linked to you taking one of the annuity options and you do not get them if you take the lump sum option.

One other thing to watch out for is that is possible that the lump sum options could be eliminated at some point in the future and you might only be able to take one the annuity options. I had a small old pension that had a lump sum option but the pension funding numbers were lower than they should have been so they required to suspend the lump sum option for about five years until the funding numbers improved. If you retired during that five years you had to take a traditional pension. You can likely look up the details of how well your pension plan if funded to get an idea of how much of a risk that is.

When looking at the lump sum vs annuity option I like to turn the question around and ask it this way, "I have $764K in a retirement account. Should I buy an annuity with that money?" That is really the same question but looking at it from that perspective can sound a lot different.
DanFFA
Posts: 89
Joined: Sun Jan 24, 2021 9:05 pm

Re: Help please. Being forced to retire early..

Post by DanFFA »

Hey,

So one thing:
If you're going to retire at the end of the year, do it before Christmas IMO. When my Dad's former company was doing similar shenanigans they would give their awful 'gifts' at Christmas time when they wouldn't have to hear about it. This doesn't mean that's what your company will do obviously.

Another:
You will be fine. If you choose to DIY there's a billion different options this group will help you navigate through to get to the finish line! Even if you don't, that's OKAY too!
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