I was lucky enough to get hired with my company just a few months before they nixed the pension plan. Although it was frozen just a year or two later, I accumulated about $30k.
Considering I’m about to (possibly) quit my job, it’s important to fully understand what’s gonna happen with this mysterious bucket. Here’s what I learned.
If I leave this year and commence the benefit, I get a single life annuity of $96.77 per month. If I wait until age 65, I get $811.11 per month.
I could also take a lump sum balance now and get $31,041. Or wait and take a lump sum at age 65 and get $129,857.
Time to run some numbers.
Interestingly, if I take the $96.77 per month and invest it until I’m 65, it turns into about $128,241. Essentially it becomes the lump sum amount at age 65.
If I take the lump sum now and let it compound until age 65, it turns into $225,079.
The best option is to take the lump sum and roll it into my IRA to avoid immediate taxation. Then, it can be used in the ROTH conversion ladder for future spending.