Lump sum of what? I'm 44 and don't know anyone my age with a pension.

I don't think we drink more than other nations: however, like most places in the world alcohol just takes too much undeserved place at gatherings. We drunk too much and it's not unique to the United States. For real, we really love alcohol lol.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Most men do not make it to 80, so saying they are still alive at 65 is not accurate to assume they have another 15 years left. I know plenty of men who made it to 65 but not 75.

Actually, life expectancy at 65 is about 82 for men. So more than half of 65-year-old men will live more than 15 additional years.

You also need to consider your SES to get a more accurate estimate of your life expectancy. If you are in the top 25% of the income distribution your life expectancy (at age 65) is 22.5 years for men and 25.5 for women. https://www.ssa.gov/policy/docs/ssb/v81n3/v81n3p19.html.

This. There are two main things that go into calculating that lump sum. A present value interest rate and the actuarial life expectancy table. If you are a healthy educated upper middle class person (especially if you are white) you will probably beat the actuarial tables. (Some of the companies are now trying to go to a system that uses your zip code as a proxy for all this.). Whether you can beat the interest rate is a more complicated question but remember that the lump sum puts all the risk of market downturns on you, whereas the monthly payment keeps the risk on the company. So there’s a cost to that risk shifting, although it’s hard to value that risk.

The issue we have in the US isn't living longer but rather our quality of life as we age. Regardless of race and income we do not have a healthy lifestyle. By the time we retire we have been for over 30 years most likely once a week at minimum consumers of alcohol. If you look at NIH data Americans over 65 with chronic illnesses is insane compared to the rest of the Western world. As a result we spend a lot of time dealing with health issues.

In contrast to, say, France, England, Italy and Germany?

Yes, this alcohol thing is a red herring. All the countries that have much longer quality-adjusted life expectancy than the US also have higher alcohol consumption.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Most men do not make it to 80, so saying they are still alive at 65 is not accurate to assume they have another 15 years left. I know plenty of men who made it to 65 but not 75.

Actually, life expectancy at 65 is about 82 for men. So more than half of 65-year-old men will live more than 15 additional years.

You also need to consider your SES to get a more accurate estimate of your life expectancy. If you are in the top 25% of the income distribution your life expectancy (at age 65) is 22.5 years for men and 25.5 for women. https://www.ssa.gov/policy/docs/ssb/v81n3/v81n3p19.html.

This. There are two main things that go into calculating that lump sum. A present value interest rate and the actuarial life expectancy table. If you are a healthy educated upper middle class person (especially if you are white) you will probably beat the actuarial tables. (Some of the companies are now trying to go to a system that uses your zip code as a proxy for all this.). Whether you can beat the interest rate is a more complicated question but remember that the lump sum puts all the risk of market downturns on you, whereas the monthly payment keeps the risk on the company. So there’s a cost to that risk shifting, although it’s hard to value that risk.

The issue we have in the US isn't living longer but rather our quality of life as we age. Regardless of race and income we do not have a healthy lifestyle. By the time we retire we have been for over 30 years most likely once a week at minimum consumers of alcohol. If you look at NIH data Americans over 65 with chronic illnesses is insane compared to the rest of the Western world. As a result we spend a lot of time dealing with health issues.

In contrast to, say, France, England, Italy and Germany?

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Most men do not make it to 80, so saying they are still alive at 65 is not accurate to assume they have another 15 years left. I know plenty of men who made it to 65 but not 75.

Actually, life expectancy at 65 is about 82 for men. So more than half of 65-year-old men will live more than 15 additional years.

You also need to consider your SES to get a more accurate estimate of your life expectancy. If you are in the top 25% of the income distribution your life expectancy (at age 65) is 22.5 years for men and 25.5 for women. https://www.ssa.gov/policy/docs/ssb/v81n3/v81n3p19.html.

This. There are two main things that go into calculating that lump sum. A present value interest rate and the actuarial life expectancy table. If you are a healthy educated upper middle class person (especially if you are white) you will probably beat the actuarial tables. (Some of the companies are now trying to go to a system that uses your zip code as a proxy for all this.). Whether you can beat the interest rate is a more complicated question but remember that the lump sum puts all the risk of market downturns on you, whereas the monthly payment keeps the risk on the company. So there’s a cost to that risk shifting, although it’s hard to value that risk.

The issue we have in the US isn't living longer but rather our quality of life as we age. Regardless of race and income we do not have a healthy lifestyle. By the time we retire we have been for over 30 years most likely once a week at minimum consumers of alcohol. If you look at NIH data Americans over 65 with chronic illnesses is insane compared to the rest of the Western world. As a result we spend a lot of time dealing with health issues.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Most men do not make it to 80, so saying they are still alive at 65 is not accurate to assume they have another 15 years left. I know plenty of men who made it to 65 but not 75.

Actually, life expectancy at 65 is about 82 for men. So more than half of 65-year-old men will live more than 15 additional years.

You also need to consider your SES to get a more accurate estimate of your life expectancy. If you are in the top 25% of the income distribution your life expectancy (at age 65) is 22.5 years for men and 25.5 for women. https://www.ssa.gov/policy/docs/ssb/v81n3/v81n3p19.html.

This. There are two main things that go into calculating that lump sum. A present value interest rate and the actuarial life expectancy table. If you are a healthy educated upper middle class person (especially if you are white) you will probably beat the actuarial tables. (Some of the companies are now trying to go to a system that uses your zip code as a proxy for all this.). Whether you can beat the interest rate is a more complicated question but remember that the lump sum puts all the risk of market downturns on you, whereas the monthly payment keeps the risk on the company. So there’s a cost to that risk shifting, although it’s hard to value that risk.

Consider tax you have to pay on that lump sum. It’s considered as regular income.

I would like my company, rather than me, to bear the cost of insuring me for longevity risk. I will always take the regular payments.

You might die tomorrow. But you might live to 100…

Anonymous wrote:

Anonymous wrote:Most men do not make it to 80, so saying they are still alive at 65 is not accurate to assume they have another 15 years left. I know plenty of men who made it to 65 but not 75.

Actually, life expectancy at 65 is about 82 for men. So more than half of 65-year-old men will live more than 15 additional years.

You also need to consider your SES to get a more accurate estimate of your life expectancy. If you are in the top 25% of the income distribution your life expectancy (at age 65) is 22.5 years for men and 25.5 for women. https://www.ssa.gov/policy/docs/ssb/v81n3/v81n3p19.html.

Several times my employer has offered us a lump sum now, years before retirement age, as an inducement to get the pension obligations off their books. They aren’t doing that for my benefit; I am sticking with the future pension payments to diversify my sources of income in retirement. I have run the numbers on purchasing an annuity with the lump sum. The expected monthly payout at retirement age is less than I would get by sticking with the pension at my job.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Are people (men in particular) overly optimistic about their life expectancy once they retire?

If most men retire at 65 and most die before 82, then why do so many opt for monthly benefit as opposed to lump sum which could be rolled over into an IRA?

How long you live is luck, genes, taking care of yourself, and good medical care. But if you are a male alive at 65 -- the chances are very high you will exceed 80. To some degree look at you parents and how old they are or were when they died. Not a perfect predictor but then add in if you lived a different lifestyle and take into account the advances in medical care. More and more of us will live to 90 plus.

This! "Average lifespan" is different than what the actuarial tables say is likely for an individual man's lifespan if he's already lived to 65.

DP For some reason my brain has a hard time with this!

Anonymous wrote:

Anonymous wrote:I turned down my lump sum because the payout was too little.

I wanted the steady income.

This. It's actually the case for most people. I work for an international organization and I am retiring in 5 years. My organization gives me either lump sum + reduced yearly benefit or yearly benefit.

So what do you guys think? I have these 2 options.

Option 1: $63k/year for life
Option2: $423k lump sum + $29k/year for life (i can't recall the exact numbers but that's the ballpark)

I also have a.Roth IRA but I am not eligible for US social security. I have an additional rental income of $1500/month after all expenses (paid off property)

I am tempted to take option 2, but I need to look further into the tax implications of the lump sum (option 2).

I don't plan on having an extravagant lifestyle during retirement. And I did all my bucket list over the years anyways.

No take option 1 especially since you will not have social security. If you currently have a house that almost paid off you can sell it and move to a lower cost of living area if you are not in one already. Around $60k per year as a retiree (esp if you are single) is not bad at all. Your most basic needs will be met. And you also have an IRA and rental income. So if you take option 1 (lifetime payments) along with your modest IRA and rental income, you are look at perhaps $85k a year. Anyone pulling that amount yearly without social security has to be in the 20% of retirees in the United States. Please don't take the people retiring with $10 million on this forum as the norm because it is not.

Anonymous wrote:I turned down my lump sum because the payout was too little.

I wanted the steady income.

This. It's actually the case for most people. I work for an international organization and I am retiring in 5 years. My organization gives me either lump sum + reduced yearly benefit or yearly benefit.

So what do you guys think? I have these 2 options.

Option 1: $63k/year for life
Option2: $423k lump sum + $29k/year for life (i can't recall the exact numbers but that's the ballpark)

I also have a.Roth IRA but I am not eligible for US social security. I have an additional rental income of $1500/month after all expenses (paid off property)

I am tempted to take option 2, but I need to look further into the tax implications of the lump sum (option 2).

I don't plan on having an extravagant lifestyle during retirement. And I did all my bucket list over the years anyways.

I turned down my lump sum because the payout was too little.

I wanted the steady income.

Anonymous wrote:Most men do not make it to 80, so saying they are still alive at 65 is not accurate to assume they have another 15 years left. I know plenty of men who made it to 65 but not 75.

Actually, life expectancy at 65 is about 82 for men. So more than half of 65-year-old men will live more than 15 additional years.