Joined
·
44 Posts
Greetings :
I found a Retirement Income calculator on the net and punched in what my pension administrator had estimated my CV (edit: CV = 'Cash Value' for those at home trying to follow along) was last year at age 53 , after I had confirmed that I had met all the criteria for retiring in 2010 - $168,000 CV .
The numbers matched fairly well to the estimate in the online calculator . It would cost $165,000 to be able to have my DB pension income matched by an Annuity . Good so far . However , my DB pension has a substantial reduction if I begin to draw it at age 55 - a 30% reduction , or 6% per year reduction calculated from age 60 back and so I included that large reduction in the calcs .
However , there is a way around that reduction for me . I can choose to leave the money there in the DB pension a few more years simply because my age at 58 , and my _CURRENT_ years of service add up to over 89 , the so called 'magic number' . This however will mean that I will give up control of that money and can no longer transfer it out into a registered plan of some sort .
In fact , if I leave the money in until 58 and not work a single further day , not only can I retire with a full unreduced pension , but I will also receive an additional $400/month bridge benefit !
So , instead of getting a reduced monthly cheque for $1440 at age 55 , I will get a monthly cheque for $2040 PLUS $400 at age 58 , so $2440 total (all figures before taxes of course) - that's an extra $1000/month or $12,000/year if I just leave the money in the DB for 3 more years (assuming it remains stable) .
Now , if I go back to that java calculator it tells me that , in order to purchase an Annuity equal to that larger unreduced DB pension I would receive at age 58 , I would have to come up with around $245,000 (compared to the above previously estimated CV of $165K at age 55) .
My confusion is - why isn't my CV estimate higher than the $165K , and isn't it a complete 'no-brainer' that I should just leave my money alone until age 58 ?
It seems simple yet the money guy I saw said I should just take out the $165K and put some in an annuity and some in the market for better performance .
I must still not be completely understanding this whole picture and wonder where I am going wrong here . Can someone please explain what I might be missing ? If I'm way out in left field can someone please politely point out the error of my ways ?
Thanks
G J D Swain
I found a Retirement Income calculator on the net and punched in what my pension administrator had estimated my CV (edit: CV = 'Cash Value' for those at home trying to follow along) was last year at age 53 , after I had confirmed that I had met all the criteria for retiring in 2010 - $168,000 CV .
The numbers matched fairly well to the estimate in the online calculator . It would cost $165,000 to be able to have my DB pension income matched by an Annuity . Good so far . However , my DB pension has a substantial reduction if I begin to draw it at age 55 - a 30% reduction , or 6% per year reduction calculated from age 60 back and so I included that large reduction in the calcs .
However , there is a way around that reduction for me . I can choose to leave the money there in the DB pension a few more years simply because my age at 58 , and my _CURRENT_ years of service add up to over 89 , the so called 'magic number' . This however will mean that I will give up control of that money and can no longer transfer it out into a registered plan of some sort .
In fact , if I leave the money in until 58 and not work a single further day , not only can I retire with a full unreduced pension , but I will also receive an additional $400/month bridge benefit !
So , instead of getting a reduced monthly cheque for $1440 at age 55 , I will get a monthly cheque for $2040 PLUS $400 at age 58 , so $2440 total (all figures before taxes of course) - that's an extra $1000/month or $12,000/year if I just leave the money in the DB for 3 more years (assuming it remains stable) .
Now , if I go back to that java calculator it tells me that , in order to purchase an Annuity equal to that larger unreduced DB pension I would receive at age 58 , I would have to come up with around $245,000 (compared to the above previously estimated CV of $165K at age 55) .
My confusion is - why isn't my CV estimate higher than the $165K , and isn't it a complete 'no-brainer' that I should just leave my money alone until age 58 ?
It seems simple yet the money guy I saw said I should just take out the $165K and put some in an annuity and some in the market for better performance .
I must still not be completely understanding this whole picture and wonder where I am going wrong here . Can someone please explain what I might be missing ? If I'm way out in left field can someone please politely point out the error of my ways ?
Thanks
G J D Swain