I am fortunate to have a pension at my job. I can opt to take it (or a lump sum) as early as next year (age 56) when I quit working or anytime until age 65. The pension pays out 100% at age 65, and on the following schedule for younger ages:
Age 55 - 60%
Age 56 - 65%
Age 57 - 70%
Age 58 - 75%
Age 59 - 80%
Age 60 - 85%
Age 61 - 88%
Age 62 - 91%
Age 63 - 94%
Age 64 - 97%
Caveat - I believe that the money will not grow once I quit. If my age 65 pension is $2000/month, then that is what I will get no matter what happens with inflation.
If I take a lump sum and invest it, I may be able to achieve the same or better growth over the next 9 years. On the other hand, investing a lump sum is riskier than letting the pension sit.
If I take the pension, it will be old age insurance - especially for my wife who is younger than I am. In that case, I should take it at 65 to have the largest dollars as a pension for age>85. This approach may not get the most absolute $s, but gives diversification to a 70:30 stock bond allocation (with plan to glide into 100% stocks over ~first 10 years of retirement). Inflation may kill pension value, but stocks will rise with that tide.
Presently I am leaning towards the pension at age 65. I wonder what I am not considering? Thanks, aperture.
