Pension Maximization

[Jestjoan]

Please share your ideas about the pros and cons of pension
maximization........THANKS.

 

[MULTIZ321]

Jestjoan,

Here's a great article from the Utah Retirement Board on Pension Maximization


Richard

 

[Jestjoan]

Thank you very much. It is great. It might have taken me a lot of time to find that. I had just started my online searching.

I know TUGgers are "smarter than the average bear" and would be able to help.

 

[caribbean]

We are planning on a version of pension max. The earlier you start to invest in whatever plan you choose, the better. Then your fund has more time to grow. We have an investment account set up that should have about $500K by retirement. In the meantime we have term life policies on each of us to cover us until the fund can build to $500K. When we retire the term policies will expire and we will have the investment fund as a back up. We don't plan on touching it until we have to at age 70.5 and then to only take out the minimum required. We will both take the non-survivor retirement benefit but when the first souse dies the fund will be there to provide the differential for the other spouse. The fund will be sufficiently large to easily provide for cost of living increases for the surviving spouse. It al hinges on investing early & regularily. Our two non-survivor benefits plus out two SS checks should put us in a pretty good financial situation, especially when we start to tap into the investment fund for the minimal amount. Just another idea to think about.

I read the article and personally feel it was a bit too negative. Yes the agent is making a comission. But if the policy is calculated at the correct amount, Pension max can work. It just needs to be of a sufficient amount to cover the spouses future needs and still provide for cost of living increases. $100K is probably no where near enough. We just decided it was less expensive in fees to buy the term policies and then to invest the differential. And we are happy that our investment account is running ahead of schedule.You have to keep on top of that to make sure you stay on schedule. Good luck in your decision. Yu really do need to do your own math to see whatis best for YOU. Everybody's situation is different, just like in timesharing.

 

[pwrshift]

How can anyone live on $21,000 a year?

Brian

 

[Jestjoan]

DH just called Retirements Systems of Alabama..........The "counselor" said that it was not anything with which she was familiar! I suggested he call back and get the gentleman that he's spoken to previously that the university had recommended.

I didn't find anything on the TIAA-CREF site.

The Florida Retirement Systems web site had some even more eye opening info.

 

[KenK]

How can anyone live on $21,000 a year?

Brian

We like peanut butter & jelly sandwiches!

Did you read the last part of Richards link? I think it is kind of negative.

Is this just a new term that the insurance companies have come out with trying to push different types of annunities?

IMO...your best pension maximizer are first, the CPA that does or checks over your federal, state and local taxes, and their recommendation of a financial consultant that is paid by you....that is you directly...not through the fees, and hidden fees of things they are told to sell this week so every in the chain gets a bit of the fees.

When we were about to retire, I went to a 'course' at Monmouth College that was about the most biased junk I (and our Board CPA) sat through.

He was getting points...I was to listen for future retirement questions. It seems the 'professors- heh! heh! ' ran a company that PUSHED people to give them their retirement funds for some type of annunity. Of course, the annunity paid back more if you were healthy. You could not cash out. It was not guaranteed by any government agency. ( Like a CD could be).

A while later, we went to a free dinner just to listen. He didn't say anything...because some in the audience might have had soom good questions. He did send out a questionair, and promised to contact later.. ( Gee a timeshare presentation by someone who doesn't sell T/Ss.

I put on my card I was interested in an independent Certiified Financial Consultant that I WOULD PAY direct....not in a FC that kas to produce for the company he is working with. Our two friends just put they were interested in help. I was never called. They were, asked about buy & sell, & fees.

I am 100% convinced that when the person works for you and is paid by you, you will be getting a better deal....and it is very much cheaper.

 

[Jestjoan]

ING site

BTW, before I posted my request here, I had found online info from ING. On each page, it said "For agent use only. Not for public distribution." LOL

 

[KenK]

Kiplingers Retirement Report Aug 07, Vol 14. # 8 pg # 7 by Kimberly Lankford

( Wasn't she one of the writers who came here asking about T/S??)

has an article called "Annuities With New Guarantees on Returns" .

I don't know if its available free on line.

No...they list a few articles for free ( teasers) but last few are from March 07.

This link from their site might be helpful:

http://www.kiplinger.com/retirementreport/resources/


Article, however, did not bad mouth annuities, but did suggest how to shop around. One mentioned is that you can withdraw 5% or 6% every year as a guaranteed income for the rest of you life, with possiblr growth, and will keep on paying. ( I know its rare, but what happens if AXA ( one mentioned positive in the article, and one we have had due to limited choices on our employer) gets in trouble?

Could I find a CD paying 5.5% with a government backe guarantee? (Does it make any difference?

Or my own MF or even stock?

Everyone here has read what TUGs members who work in finance say. You can get a kind of feel as to how they think and plan. They aren't beholding to anyone here....they are careful about what they say, but my inability to completely understand that article above (although completely appearing to be unbiased, just info giving) would be enhanced with someone I could trust in offering an explaination.

I was lucky where I worked. Every board CPA seemed offer offer their ideas...and some made sense...whether I followed them or not.

Did follow their advice in 1990 not to start an investment club for the group because the questions sent out about willingness to help were all negative. But were willing to put in $50 a month. Not good, because decisions on where to put the $$ had to be agreed by most.

Some companies mentioned in the article THEY felt were good included AXA, MET LIFE, Ohio National because of their flexibility and great investment management.

(Another neg...there may be a surrender charge on some of the annuities. )

Wish I could find a link to that article. Boy, is Kiplingers getting cheap

 

[Jestjoan]

The silence is deafening...........

 

[Jestjoan]

DH ordered The Wall Street Journal Complete Retirement Guidebook and there is nothing in the index on pension maximization! I hate books with "complete" in the title.

 

[bogey21]

Sounds like Russian Roulette. If H and W both die at the right time, Pension Max may work fine. For peace of mind I'd rather have the Survivor Annuity.

Buying cheap term life insurance for protection until the nest-egg is built does make sense. But these concepts are apples and oranges.

GEORGE

 

[hvsteve1]

They were selling that stuff 20 years ago when I was in the insurance business. While the figures in the article appear correct, what you have to take into account is that it was issued by a retirement system with a COLA. Because of the cost of living increases, the reduced benefit will, over time, outstrip the full pension with a pension max. If you use a different pension without COLA, the figures will change. So far as the commission, who cares? It is front end loaded but pretty much disappears in later years. Your auto and homeowners agent gets a smaller commission that is constant from year to year. If the person you're dealing with is knowledgable and experienced, they will end up with no less in their pocket than a similarly trained accountant, attorney or fee-based financial planner. And, if you don't like your advice, or decide to go with the plan but give it to your wife's second cousin who's starting out as an insurance agent, they get nothing. Try not paying the guy who does your taxes because you didn't like the size of the refund.