Hello bogleheads, want to consult you all about a choice my wife (recently retired, age 58) has to make. There is a pension benefit from her employer that she has been asked to choose from the following options. (This benefit was mostly transitioned to a 401K back in the 1990s so this is sort of a remnant.)
Option 1: Take a $67K lump sum payment paid immediately and rolled into her IRA.
Option 2: $550 monthly starting 1/1/2025
Option 3: $705 monthly starting 7/1/2030
We don't need the money immediately. When I retire next year, we will both be on ACA until we hit Medicare age. I think this makes Option 2 a non-starter for me since it adds income that will affect the ACA premium subsidies.
If my calculations on NPV are correct, at about 7% growth and a 20 year payout, the three options look about equivalent.
I'm inclined to take Option 1 just for the additional flexibility for tax and income we get by managing it ourselves.
Does this seem reasonable? Anything else we should consider? Really appreciate any advice.
Option 1: Take a $67K lump sum payment paid immediately and rolled into her IRA.
Option 2: $550 monthly starting 1/1/2025
Option 3: $705 monthly starting 7/1/2030
We don't need the money immediately. When I retire next year, we will both be on ACA until we hit Medicare age. I think this makes Option 2 a non-starter for me since it adds income that will affect the ACA premium subsidies.
If my calculations on NPV are correct, at about 7% growth and a 20 year payout, the three options look about equivalent.
I'm inclined to take Option 1 just for the additional flexibility for tax and income we get by managing it ourselves.
Does this seem reasonable? Anything else we should consider? Really appreciate any advice.
Statistics: Posted by musicislife — Thu Sep 12, 2024 1:58 pm — Replies 8 — Views 284