Tuesday, October 23, 2007

Quesion about pensions

I have recently gotten the information regarding my pension and what the pay out will be when I decide to take it. This is from my first job, back when I was 16 and working at the grocery store. I stayed long enough to become vested in my pension and this is what the payout looks like.

At age 55, I would receive 60% of the benefit, meaning the checks would be $278.84/month, but if I wait until age 63, the monthly check would be $449.74. So, what would you do? Thankfully I have 20 years before I can even try to decide what to do, but the thought has crossed my mind and I just don't know what to do, so I thought I would ask what others would do.

Also, can I plug my pension into my retirement numbers and add them in to my net worth, or are they completely separate? Any help is greatly appreciated. Thanks!

5 comments:

SavingDiva said...

I would definitely wait until 63...

I didn't know grocery stores had pensions...hm....when I worked at one in high school, I'm sure they didn't have one.

Sense to Dollars said...

Why not wait? At this point in our lives, 55 and 63 don't seem like very different ages. If you get to 55 and REALLY need the money, go ahead and take it. But for now, count on and plan on not having that money until you're 63.

Also, single ma had a discussion about her pension and whether to include it in her net worth. See the comments:

http://singlemomandmoney.blogspot.com/2007/01/pension-cash-value-in-net-worth.html

BTW, thanks for your recent comments!! As soon as I have some motivation, I'll add you to my blog list. :)

Escape Brooklyn said...

I don't know about waiting only because the difference is so small ($170.90/month extra). According to my math, you won't see the benefit of waiting until you're 77 years old:

Age 55-77 x $3,346/year = $73,612
Age 63-77 x $5,396/year = $75,544

So perhaps if you expect to live a *really* long time then the extra couple of thousand per year may help, but I'd probably be tempted by the income starting earlier at age 55.

But I know I've read some things that say that with social security, for instance, it's usually better to wait, so perhaps I'm jumping the gun!

Hmmm, how could you add it to your net worth? Maybe you could calculate how much an annuity would cost to pay you the same annual benefit and add it to that part of your assets? Not sure what other folks do. (My pension is a defined-contribution plan, not a defined benefit plan like yours, so I just include it as part of my retirement assets.)

Chitown said...

Can you roll your pension over into another vehicle?

I know that if I left the bank that I work for, I would be able to take my pension with me since I am vested. Just something to think about because some grocery chains go out of business or get consolidated. If that happened, what would happen to your pension?

Living Almost Large said...

Planning on staying with the job?