Hi everyone,
My parents are retiring in the next 3 months, and have to choose whether to take a lump sum or pension. I've been trying to help them with the decision, and thought I'd throw their details out there to the community and get your thoughts. Their stats:
Dad: 58 years old retiring effective March 1, 2015
Mom: 56 years old, both healthy
They are 100% debt free
Assets:
Traditional IRA - $175,000
Roth IRAs - $25,000
401-K - $350,000
Cash - $50,000
Fixed Assets - $400,000 This includes 2 brand new cars, a fancy RV that will be a large part of their retirement entertainment, and a $300k paid for house.
Monthly expenses: $5700
Retirement Options
Monthly Pension - Before Age 62 -$4,300 monthly
After Age 62 - $4,000 monthly
Surviving Spouse Benefit - $2,600 monthly
Lump Sum would be - $860,000
Questions
1. Would you take the lump sum or pension? Why?
2. Would anyone be concerned about taking the lump sum and investing that in the market, as high as it is right now?
Thank you for the input and happy new year!