Thank-for taking the time to reply. Good insights.I don't think there is a general answer because pensions are all over the place. Monetarily, I would compare your pension amount to what an immediate annuity would pay using the lump sum offered in lieu of your pension. That is assuming you are an average human as that is how annuities are priced. If the pension amount is higher than the annuity amount, then the pension is a good pension. Most immediate annuties aren't offered with a COLA, so that makes the comparison to a non-COLA pension more fair.
But a good pension may not be better depending on your goals, such as: are you sick and single and likely to die well before average age? Want to leave money to heirs, especially if you die early? Do you have other income streams (spouse pension and two high social security incomes) so you don't need more monthly income? Do you have giant tax deferred accounts (trad IRA, 401K, 403b) that are going to create a tax bomb? This last one is tougher, as a lump sum will add to that tax deferred stack, but a pension takes away headroom for Roth conversions.
If you are married and longevity run in you or your spouse's family, a good pension may be the better choice or even a fixed annuity bought with a lump sum.
Statistics: Posted by a32Jun1966 — Fri May 10, 2024 9:01 am — Replies 4 — Views 489