Question for the masses. If you leave the company via PIL, but your are vested in the pension, is it better to leave the pension as is and cash out when you reach 59 or does it stagnate and not grow after you leave?
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As I understand, you ONLY get the lump sum option within 90 days of leaving the company. You cannot cash out after that...if you are willing to take the annuity, then waiting longer is usually better, if you feel you have a long life expectancy. You should model it out however. You should be able to model this out on the Alight website. THIS ASSUMES A US BASED PENSION.
If you leave before retirement eligible, you still get your full earned pension but it doesn’t start until 65 vs 60 if you are a retiree. The actuarial adjustments for cashing out early are therefore harsher. You could wait until 65 and there would be no discount then, but inflation between now and then will eat the value.
How much of the pension do we actually get if we have 10 yrs of service but not yet retirement eligible for years?
I think the original question was about whether to start pension immediately vs deferring to avoid the 5% per year reduction before age 60. The 5% is only compensating you for getting the pension for fewer years by deferring. You’re not getting any interest on what you are deferring. So if you do decide to take the monthly pension, take it immediately and leave your 401k to grow.
Almost always taking the LS is better. Roll into an IRA and you immediately get MUCH better investment options. Taking an annuity at retirement age is really only for those who have no discipline and feel they will live a very long life. Generally, the annuity ALWAYS performs worse than lump sum invested as you wish.
Google bro
Take the money dude! Don’t leave it with XOM!
Definitely get yourself a professional financial advisor.
I’m assuming if you have a vested pension you probably have a 401k as well.
Since this was not my first company I have left, I already had a traditional IRA set up to move the 401K into and took the lump sum as well. My financial guy gave me instructions but basically I requested both checks to be made out to the IRA account which has my name associated with it. I then sent the checks to my financial advisor, certified mail and they do the rest.
After 20 years over 3 different companies, the IRA has grown nicely
I took the LS on the pension, rolled it into my Voya retirement account and have watched the whole thing skyrocket. Retirement savings started growing a lot faster with that “pension” boost. Hope the snowballing continues.
Transfer it to an ira and incure no taxes and penalties. I am waiting to retire and get my money out of voya. My financial guy at Morgan Stanley is waiting as well. If you take the lump sum out as cash you will get hit by some severe taxes and penalties. Get a good financial advisor and let them help you. They will charge you 1 percent of the principal but it is worth it. Good luck.
Talk to your financial guy and not some random people online.
It will not grow after you leave. Depending on your age, you could have early withdraw penalties, if you withdraw before it's time.