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When should I take my pension?

#1
Been a lurker here for a while and appreciate the valuable info and discussions that occur, very educational.  I'd appreciate some thoughts/input on the following...
 
I have a pension from a previous employer that I am now eligible to take (eligible at 50 years old).  I'm currently employed and do not need the money.  The plan is well funded and appears to be stable.  Below is the breakdown of what the monthly payout would be based on the age I take it.  For example, if I take it at 54 I'll receive $606 per month.  In the event of my death my spouse will continue to receive the pension at the same amount.  I've run through some numbers based on taking the pension early and saving/investing the cash versus waiting for the monthly payout to go up.  Would greatly appreciate any input and additional things to consider from those with more experience with this.  As an aside I'm targeting 62 for retirement.  Thanks much.
 

   
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#2
I'll give you my practical answer -- first question -- do you need the money-- need means -- you can't pay real bills created by survival not you want a new cell phone every week -- if not -- next, think of your current investments-- do any of them guarantee you a 6-8 percent return that will be coming in monthly for the rest of your life (survival monthly money not needed to come from your investment portfolio) esp during bad times -- I consider this matter the most important -- have you developed an income stream plan -- meaning the stock market while good a place is not a place to put all your chicks -- develop an income stream plan, money coming to you each month -- think of your pension as a G and I part of your portfolio and part of your income stream -- Is your families heath is good and if you don't need the money, your in doors with heat and light -- you take vacations -- and you've answered your own question -- When you take it might be a matter you take up with your accountant for tax ramification-- My last parting shot is -- what would you do with it, if you took it now -- the average American would say, I'd invest it !! but that enthusiasm only lasts a split second and then life takes over -- many answers to a complex issue but only you can answer it because its your life style that will determine it - this was my planning process and as simple as it sounds it worked for my lifestyle good luck
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#3
I’m in a similar situation. I have a pension that I can begin to access in two years. I also plan to retire early. I built a detailed financial model that looks at all sources of income (part time work, dividends from taxable account, retirement accounts, rental income, and pension). The model covers the next 30 years and includes all income and expenses.

Bottom line: taxes and health care play a big role in the decision of when and how to take the pension. I don’t think you can answer the question of when and how (my plan allows for many different ways to take the pension) until you do a detailed analysis that considers taxes and health care And all the other sources of income you may have.
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#4
I agree with BTDretire that there are a lot of factors involved. Many of them are questions only you (and your spouse) can answer. That said, i will chime in with a couple of things that may, or may not be applicable/helpful.

Do you presently have a Roth IRA? If not. and you are eligible, you might consider taking the early retirement at some point and use it to fund a Roth. If possible, cover the taxes with your regular income and deposit the full amount in the Roth monthly.

Secondly, how does your pension plan treat your spouse should you not take it early. You state that once you start the plan, your spouse will be entitled to the full benefit should you pass. However, under some plans, if you have not started your benefit and should die, your spouse will not be eligible for any benefit until the date you would have reached normal retirement age. You need to check this with your plan, as it should be factored into the decision. My father was in a similar situation as you. He also had a pension with a former employer he could take early at 55. The money wasn't needed, but he decided to go ahead and take the pension and continue working in his own business. Unfortunately, after being healthy his whole life, he came down with a rare cancer and died 11 months later. Although she didn't really need it, my mother was able to continue drawing the benefit, and continues drawing it today at age 87(she still doesn't need it to survive). However, had my father not started the benefit early, she would have had to wait 9 years until his 65th birthday anniversary to draw any benefit. This may not be a significant issue in your case, but you should definitely be aware of how your pension handles this.

That's all I've got. Good luck to you in whichever route you choose to take.
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#5
I do not know your longevity, other assets, plans for social security, IRA Required Minimum Distributions, etc., which may all impact the answer.

Assuming that they are all break-even without considering taxes, you may have an incentive to take it once your retire and before RMDs begin,assuming the RMDs may put you in a higher tax bracket later. The early money will be more valuable, given lower taxes.
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#6
I'm a "bird in the hand" kind of girl." I like the idea of taking it now and putting it in a ROTH. Or just taking it and investing it in a taxable account if you're already maxing your retirement accounts. Historically, even with bull and bear markets you'll average 10% with funds invested in the market, and depending on your stock picking ability it could be much more than that.
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