Seeking opinions

Madame · #1 09/24/10, 04:43 PM

I found out today that I am eligble to receive retirement pay from an old employer. I can start collecting now or wait for 5 years. If I start now I get $644 a month. If I wait 5 years, it'll be $792 a month.

I have $19000 worth of debt, not counting the mortgage, and would love to have several thousand a year to pay it down. But I wonder if I'd be smarter to plod along, and wait 5 years thus getting the larger sum. As is, the existing debt will be paid off in 4-5 years.

So, those of you who are financially wise, please tell me what choice you think is best and why.

ldc · #2 09/24/10, 04:55 PM

Madame, some time ago you and I discussed a possible chronic health condition. If this continues to be with you, please take the retirement payments now. If not, your calculations may be quite different! Best regards, ldc

HOTW · #3 09/24/10, 05:03 PM

ok lets figure out say you maybe have 20 years left (I have no clue how old you are) or 25,30 more. This si not to say you don't keep the majority invested and have th epotential to earn more.

644*12*20=154560 25=193200 30=231840 35=270480
792*12*15=142560 20=190080 25=237600 30=285120

jill.costello · #4 09/24/10, 05:06 PM

Take it now, you never know what the future will hold. That old employer may go bankrupt, or your health may decline.

WindowOrMirror · #5 09/24/10, 05:12 PM

factor the interest rate in with how much you are paying each month now, and draw a line.. then, add an amount each month you COULD pay with the money now, factor the interest rate, draw another line. Compare the saved interest totals with the $15k difference in timing and decide on the one with the most net present value of cash!

Madame · #6 09/24/10, 05:14 PM

Idc, my Parkinson's is a factor that I'm considering, and I'm inclined to agree with both you and Jill. Hotw, I'm 57 and hope to work 5 more years, health permitting. At that time, I'll get retirement from this job and social security. If I have to quit working because of health, then I will qualify for disability, which would be a bit more than I'd get otherwise.

mellba · #7 09/24/10, 05:21 PM

I'd take the money now. We never know how long we'll be here.

TnMtngirl · #8 09/24/10, 05:24 PM

I agree take it now,I took mine the whole 86.00 a month

mothernature · #9 09/24/10, 05:26 PM

We never know if things will change because of the economy, take it now!!

HOTW · #10 09/24/10, 05:29 PM

I'd say take it and try not to use it much I am sure if you oinvest it you'd get more interrest over the long period(I'm not investment whiz my mum is) plus you can't tell what will happen get it while you can because it wil take you 23 years tobreak even/get more than it you take it now.

arabian knight · #11 09/24/10, 05:35 PM

Quote:

Originally Posted by Madame

Idc, my Parkinson's is a factor that I'm considering, and I'm inclined to agree with both you and Jill. Hotw, I'm 57 and hope to work 5 more years, health permitting. At that time, I'll get retirement from this job and social security. If I have to quit working because of health, then I will qualify for disability, which would be a bit more than I'd get otherwise.

Don't forget that if you have to retire and go on SS Disability you can not get Medicare coverage for 2 years. COBRA if you can afford it will only be for 18 months, 6 months short of getting Medicare coverage.
And you say 57 now in 5 years you will be 62 and you still can't Medicare until you reach 65 then.
There is a 24 month waiting period for Medicare, if you are not yet 65 and go on SS Disability.
So put that into the equation also, if you have a hard time making up your mind on taking the retirement pay.

mnn2501 · #12 09/24/10, 05:35 PM

Quote:

Originally Posted by HOTW

ok lets figure out say you maybe have 20 years left (I have no clue how old you are) or 25,30 more. This si not to say you don't keep the majority invested and have th epotential to earn more.

644*12*20=154560 25=193200 30=231840 35=270480
792*12*15=142560 20=190080 25=237600 30=285120

This chart really says it all, if you live 20 years will earn $12,000 less by waiting, if you live 25 years you will earn $3000 less by waiting, and if you live 30 years you will earn $15,000 MORE by waiting

What's your health like?

chickenista · #13 09/24/10, 06:03 PM

Take it now for all of the above reasons.

You could place it in a high interest, high return situation and recover the loss.
OR.. add up the amount of the interest on your debt and mortgage over the next 5 years and compare the difference.
I bet you would save more by paying off your debt and getting rid of the interest on that than you would if you waited 5 years for more actual income.

ErinP · #14 09/24/10, 06:07 PM

Madame, if it's a stable retirement plan (say, from the state's government employees fund (aka teacher retirement)), I'd be more inclined to wait.

However, anything less secure than that, I'd forego the extra income and take it now.

Madame · #15 09/24/10, 06:19 PM

Quote:

Originally Posted by arabian knight

Don't forget that if you have to retire and go on SS Disability you can not get Medicare coverage for 2 years. COBRA if you can afford it will only be for 18 months, 6 months short of getting Medicare coverage.
And you say 57 now in 5 years you will be 62 and you still can't Medicare until you reach 65 then.
There is a 24 month waiting period for Medicare, if you are not yet 65 and go on SS Disability.
So put that into the equation also, if you have a hard time making up your mind on taking the retirement pay.

Since I served in the military, I qualify for VA medical coverage. I've already started the paperwork. Otherwise, that would be a MAJOR concern.

Narshalla · #16 09/24/10, 06:27 PM

Quote:

Originally Posted by ErinP

Madame, if it's a stable retirement plan (say, from the state's government employees fund (aka teacher retirement)), I'd be more inclined to wait.

However, anything less secure than that, I'd forgo the extra income and take it now.

I agree with this.

arabian knight · #17 09/24/10, 06:37 PM

Quote:

Originally Posted by Madame

Since I served in the military, I qualify for VA medical coverage. I've already started the paperwork. Otherwise, that would be a MAJOR concern.

OK that is good to know. Sorry that you are having health problems, hope you can get things for the better in years to come.

jill.costello · #18 09/24/10, 06:44 PM

Quote:

Originally Posted by Madame

Idc, my Parkinson's is a factor that I'm considering, and I'm inclined to agree with both you and Jill. Hotw, I'm 57 and hope to work 5 more years, health permitting. At that time, I'll get retirement from this job and social security. If I have to quit working because of health, then I will qualify for disability, which would be a bit more than I'd get otherwise.

Madame, qualifying for disability and actually GETTING disability are two different animals. I was medically retired from the Army AT 100% disability and it STILL took me 2 years worth of 3 appeals to get my Social Security Disability..... I had stacks and stacks of medical records, doctors recommendations, another government agency rating me at 100%, etc, and SSD still fought me tooth and nail!

farmergirl · #19 09/24/10, 07:01 PM

Take it now, assuming that you are paying any interest to speak of on your $19000 in debt. The small difference in monthly retirement pay amount is not worth waiting 5 years for if you can use the money to pay off your debt sooner, thereby saving untold thousands in interest. Not to mention, with the debt paid down sooner, you can then apply more money each month to your mortgage to pay down the principal, thereby shortening the term of your loan by years and years.

Carpe diem!

danielsumner · #20 09/24/10, 07:06 PM

Quick ? Is there a cost of living increase with the penison?