Looking for some advice from the Math/Pension Wizards around the boards.
I resigned from my job this year to do a trial run at FIRE.
I have a small pension from my former employer and just received the paperwork.
The Pension Options Form says the following:
Lump sum $9.115 if taken in January 2017
Single life annuity $42 monthly
50% Joint and Survivor $41 / 20
75% Joint and Survivor $41 / 30
I thought the annuity would start when I reach retirement age in 2036, but after calling them they confirmed that it would be the sum if I took it right now staring January 2017 until death.
I also checked if they have some sort of extra benefit in retirement (such as discounted health insurance etc.) if I waited until full retirement age, which I know some companies offer. But unfortunately they don't.
The company is a Fortune 500 Company and has been around for quite some time if that makes any difference.
I am wondering what to do.
My gut says to take the $42 now, my math says to take the lump sum and invest it.
Considering I am 20 years ahead of regular retirement age, the cummulative value seems more interesting than just cashing in on the lump sum.
Investing the lump sump would give me roughly $30/month at 4% WDR, plus I'd have the money in my control. It would take 65 years to get to the break even point (monthly $30 plus lump sum, compared to $42 monthly, not taking into account interest) if I am not totally mistaken. But I am not 100% sure if my math is right and if I am comparing apples to oranges..
I know ultimately I am making a longevity bet if I take the annuity.
Is there anything I am overlooking?
I know there are some folks on here, how have this down to a T, please enlighten me!!
Thanks!