It’s it a good idea to take the lump sum even though it means you can not work for the employer? Is the pension guaranteed by the PBGC no matter what?
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Invest into a good Mutual Fund. LOL.
You must weight the options. If you take a lump sum and invest the money into a good mutual fund or some other investment that can give a good return, then take the lump sum. If you have no financial restraint and just want to buy a boat or blow the money then take the monthly payments. Get yourself a good financial advisor and tax accountant which are worth the money you will pay them.
Give considerable thought before taking a lump sum distribution! A pension backed by the PBGC is guaranteed monthly income for the rest of your retired life. That is a span that could possibly exceed 30 years. Ask yourself, can I guarantee the same monthly income from my lump sum if left to my own devices? Unfortunately, I've seen too many cases where people have decimated or exhausted their lump sum before they even reached retirement. A pension backed by the PBGC is a very precious resource to ensure a financially secure retirement!
If you are offered a lump sum take it. At the time I filed , lump sums were not an option. My pension was shifted to Met Life last year. Now I have to keep an eye on what Met Life is up to.
ask someone who worked for Delphi what happened to their pensions after the GM bankruptcy. Spoiler alert: it was not good
Take the lump pension while you can. After bankruptcy it may not be available. I did, and have never regretted it.
Oh wow, that's a lot better than I thought I remembered the guarantee being when I looked into it a year or two ago. Could've sworn it was percentage-based no matter how small your original pension amount was.
@dcs - For most of the retirees from SHLD the PBGC will guarantee the full amount of their pension.
"The Pension Benefit Guaranty Corporation (PBGC) has announced that the maximum monthly insurance benefit for participants in underfunded pension plans terminating in 2018 is $5,420.45 per month or $65,045 per year for those who retire at age 65."
There are few SHLD retirees that receive a pension payment in excess of $5,420.45 per month. Also, very few investments offer any type of guarantee on your principal and/or future payments. Good luck duplicating your monthly pension payment with a guaranteed investment of your lump sum in today's low interest rate environment!
I took my pension in a lump sum. 18 years of service. It was not much, cashed it out. It depends on what plan you are in? I was able to get my full pension. I could have left it there to gain more money thru the years. See what plan you are in?
PBGC guarantees you'll keep getting something, but for many retirees, it won't be the full amount you originally expected.
I don't think not being eligible to go back to work for Sears/Kmart will be much of an issue. You probably won't have a Sears/Kmart location near you for very many more years. If you need to go back to work, any other retailer should be willing to hire you.
With a stable company behind it, most people are better off taking pension payments on an ongoing basis. But I would strongly consider the lump sum if I were you. If you go for it, you should most likely immediately invest it in a diverse index fund at a low-cost brokerage such as Fidelity, Schwab, or Vanguard. Stay away from Edward Jones, especially.