Should I roll out my portion of my pension???

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shicdaddy
Posts: 3
Joined: Tue Apr 18, 2017 2:31 pm

Should I roll out my portion of my pension???

Post by shicdaddy » Tue Apr 18, 2017 2:56 pm

Emergency funds: yes 3 months
Debt: mortgage 15yr fixed small amount of personal debt less than $10,000
Tax Filing Status: Married filing jointly
Tax Rate: 15% Federal, 3.07% State
State of Residence: PA
Age: 40
Desired Asset allocation: 90% stocks / 10% bonds
Desired International allocation: 25% of stocks

Current retirement assets
Short version

I left job with a pension which I can take only my portion and must leave company's portion or I can leave both.

If I leave everything alone I can collect $1934 as a monthly pension starting at age 60

or

I can take my portion now (appx $55,000) and collect the company portion of $1165 monthly starting at age 60
(the $55000 grows and 4% annually with them to $116000 at age 60)

I have a small Roth IRA ($14000) which I recently transfer to Vanguard and just started a 401K with my new company no money yet.
25% Vanguard 500 index
25% Vanguard Mid cap index
25% Vanguard Small cap index
25% Vanguard growth international


Should I roll this money out and invest it on my own? I feel like it is the right decision but once its done I can never go back. I have been reading this form for a while and it is why I am now on my own and a clear of high broker fees. I know it's not a lot of money but it is to me. Any advice would be greatly appreciated. Let me know if you need additional information to help me out.
Last edited by shicdaddy on Wed Apr 19, 2017 3:25 pm, edited 1 time in total.

lazylarry
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Re: Should I roll out my portion of my pension???

Post by lazylarry » Tue Apr 18, 2017 9:01 pm

we need more info, would post as per the link at bottom.
my guess is that you taking the portion now will be better if there are high fees though your tax bracket now and at retirement will determine this.
Asking questions: https://www.bogleheads.org/forum/viewtopic.php?f=1&t=6212 | My profile: https://www.bogleheads.org/forum/memberlist.php?mode=viewprofile&u=86026

shicdaddy
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Joined: Tue Apr 18, 2017 2:31 pm

Re: Should I roll out my portion of my pension???

Post by shicdaddy » Wed Apr 19, 2017 3:28 pm

updated info

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#Cruncher
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Location: New York City
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Re: Should I roll out my portion of my pension???

Post by #Cruncher » Wed Apr 19, 2017 10:37 pm

shicdaddy in original post wrote:Age: 40 ... I can collect $1934 as a monthly pension starting at age 60 or I can take my portion now (appx $55,000) and collect the company portion of $1165 monthly starting at age 60
It sounds like the choice is between $55,000 now and $769 ($1,934 - $1,165) per month starting in twenty years. Using the SSA 2013 Period Life Table with this longevity estimator I see that $769 / month, survival-weighted for a male, represents a 3.8% return on the $55,000.

Assuming the pension is not inflation-indexed, this seems a little low to me for a cash flow that doesn't even begin for twenty years. I'd take the $55,000 if it can be rolled into an IRA.

CurlyDave
Posts: 188
Joined: Thu Jul 28, 2016 11:37 am

Re: Should I roll out my portion of my pension???

Post by CurlyDave » Wed Apr 19, 2017 11:52 pm

There are 4 reasons to take the money out:

1. As has been pointed out, the return is not that high.

2. A pension is not as guaranteed as some think. What is going to happen to that company over the next 20 years? The $55k right now is a sure thing.

3. This may not be the common wisdom here, but any time I have the choice between being master of my own destiny and leaving it to someone else, I choose to be in command. I know I will not pay excessive fees, and I always have my own best interest in mind. Are this things really true of whoever manages the pension fund for your old company?

4. For the same reason that diversification is good in investing, having two independent income streams is better than one which is the sum of the two.

shicdaddy
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Joined: Tue Apr 18, 2017 2:31 pm

Re: Should I roll out my portion of my pension???

Post by shicdaddy » Thu Apr 20, 2017 6:52 am

Thanks for the replies.....
Yes the $55000 represents $769 per month starting in 20 years which does not seem great.

I am going to file the paper work and roll it into a IRA and take control of my own future. I knew it was the right answer but I want to make sure I did not miss anything.

TBillT
Posts: 275
Joined: Sat Sep 17, 2011 1:43 pm

Re: Should I roll out my portion of my pension???

Post by TBillT » Thu Apr 20, 2017 8:53 am

Is this the Pennsylvania State Employee Pension system for school employees etc.?
I was going to post a question about that as I am trying to help a family member with retirement options.

4% return is excellent right now...I'd certainly be tempted to hold for a while until I had a better idea. Where can you get a guaranteed 4%? Nowhere. This is an example of an overly generous public plan, but not too bad (good I mean), if it's what I think it is (state pension system).

flyingbison
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Joined: Wed Mar 12, 2014 8:52 am

Re: Should I roll out my portion of my pension???

Post by flyingbison » Thu Apr 20, 2017 9:32 am

shicdaddy wrote:Thanks for the replies.....
Yes the $55000 represents $769 per month starting in 20 years which does not seem great.

I am going to file the paper work and roll it into a IRA and take control of my own future. I knew it was the right answer but I want to make sure I did not miss anything.


Late to the party, but I had to make a similar decision years ago and chose to roll my portion to an IRA as well.

Since that time, some of the plan rules have changed - increasing the retirement age, for example - so I am glad I took control of what I could.

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