Personal Investments • Retiring Soon: Pension/Lump Sum Decision - Now or Defer?

- I don't need the money. I can meet my essential and discretionary expenses with my taxable investments and 401k.

Money details (skipped years and rounded) (~7% increase per year):
Age, Pension (monthly), Lump Sum, IRR of Lump Sum to beat Pension at age 90 (me only)
55, $975, $218k, 4.1%

When I had this decision to make, my decision came down to having control of the money (doing what I pleased with the lump sum) and the probability that investing the lump sum would ultimately result in larger value in inflation-adjusted dollars.

With your age 55 lump sum, you could...
- build a TIPS ladder out to 2054 and have 10K/year in real dollars available for spending (calculated using tipsladder.com)
- invest the money using a 30/70 asset allocation, withdraw $975/month nominal, and after 35 years still have a 95% probability of having a non-zero balance. This scenario is likely to have value greater than the initial lump sum (in real dollars) after 35 years too. https://www.portfoliovisualizer.com/mon ... J35zi9UUde

Since you "don't need the money", I would seriously consider taking the lump sum at some point.

Statistics: Posted by dogagility — Tue Apr 30, 2024 5:20 am — Replies 6 — Views 954

---