The mathematical comparison would be to take the lump sum and invest it in a 17-year zero-coupon bond, then use the value of that bond to buy an annuity. The 17-year bond yields about 4%, so you would have $55K at age 65. If that purchases an annuity of $6400 annually, the payout rate would be 12%, which is much higher than the retail rate for an annuity.
Thus waiting for the pension is a good deal; if you take the lump sum, you would have to take a lot of risk to get the same withdrawal amount.
Thus waiting for the pension is a good deal; if you take the lump sum, you would have to take a lot of risk to get the same withdrawal amount.
Statistics: Posted by grabiner — Wed Sep 11, 2024 11:05 pm — Replies 5 — Views 498