Quote:
Originally Posted by Plinker
Ok, I’ll bite.
I would, hands down, go with option #1 for the following reasons:
1. Lump sum to IRA will open up far more investment options than are likely available at current company.
2. Would allow IRA conversions to ROTH IRA’s and lower RMD’s.
3. Company could go bankrupt.
4. If legacy is important, the pension dies when the annuitant dies. Heirs get bupkis. May or may not be an issue.
5. Can take a distribution to cover a larger than expected emergency.
Also, need more information as to current age and other retirement assets this couple has in order to answer accurately.
Generally speaking, usually better to take the lump sum.
Here is the real conundrum in answering the question. You don’t know when you or your spouse will die. If you live to the ripe old age of Moses (120) then I would alter my advice.
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I agree, the plot twist is that the annuity can be taken while working, it will be adjusted upwards to final amount once the working spouse actually leaves the organization. With the sole income earner retirement several years away,
The choice taken -> Choice # 2
Reason: it provided an income stream in lieu of the other spouse working,
and provided added income while the current spouse worked and both spouses haven't/didn't take social security to increase the social security payout.
These options make retirement planning and retirement choices between immediate income and more flexible future income. .
And yes i left it out as it would increase the complexity of the question . . .