I could use some advice on parents retirement options....they have to chose one...


#1

I know this might be more appropriate to put into the money section but not as many people visit that section so I was hoping this thread would be a acception… Here goes…

My mother will be retiring from Boeing in 6 months…the question is…if my mother accepts only half her pension and something happens to my mother, Boeing will continue paying out my mother’s pension to my father until he dies. If they accept the full amount of my mothers pension then if something happens to my mother then my father will no longer get my mothers pension. My father is 71 my mother is 67 years old. They are both in decent health. My father has no pension and my parents both will have ss, 401k, and some stock. So would you go for half a pension for both thier lives or the full amount based upon my mothers life only? And why would you chose one over the other?


#2

If they don’t need it right away, I would think your Mom should take the full amount and just bank it. If they need it later, they can draw on what they’ve banked.

But if they bank it and your Mom passes away, then your Dad can draw on what they’ve banked.

Actuarially, it’s probably more likely that your Dad will pass before your Mom. So if they want to play the odds, it may be more prudent for your Mom to take the full amount so she’ll continue to get that instead of just half perpetually.

Of course, this path may deprive your Dad of getting some of it if your Mom passes first. But I would be inclined to play the odds when planning, and him surviving her is unlikely. Another consideration may be whether or not he would absolutely need it to survive. As you’ve drawn it though, it seems as though he will have some other sources of income that may suffice.

There’s another consideration, and while it probably would not come to pass, it’s possible.

And that’s the solvency of the Boeing pension plan . . . there’s the possibility that it will go belly-up. Unlikely but possible.

As I recall, there’s some government agency that oversees pension plans and “guarantees” them. But I’ve also seen several articles that claim pensions are woefully underfunded. And counting on a “government guarantee”, especially considering that the economy is in the tank and also the current group of Chicago thugs running things, I’m not so sure that I would plan based on a “government guarantee”.

So if the scenario is that the pension may not be there someday, that also argues that perhaps it’s more prudent to take the full amount while it’s still available.

For these reasons, banking it, the actuarial probabilities, and the possibility of the pension completely disappearing or substantially reduced, I think I’d opt to take the full amount if I were in their shoes.


#3

I would take the full amount and invest 50 percent in a stable dividend earning stock, women almost always outlive men even when the man does not have a 4 year head start and a good dividend stock will outpace any money market or mutual fund.

If your parents don’t mind babysitting their own portfolio they could divide the 50 percent targeted to investment between a dividend stock and some growth stocks that they rotate and turn the 50 percent investment back into the full amount as they go, most retirees are not very comfortable with that model if they have not been doing that all along though.


#4

[quote=“ObamaNOT, post:2, topic:37420”]
If they don’t need it right away, I would think your Mom should take the full amount and just bank it. If they need it later, they can draw on what they’ve banked.

But if they bank it and your Mom passes away, then your Dad can draw on what they’ve banked.

Actuarially, it’s probably more likely that your Dad will pass before your Mom. So if they want to play the odds, it may be more prudent for your Mom to take the full amount so she’ll continue to get that instead of just half perpetually.

Of course, this path may deprive your Dad of getting some of it if your Mom passes first. But I would be inclined to play the odds when planning, and him surviving her is unlikely. Another consideration may be whether or not he would absolutely need it to survive. As you’ve drawn it though, it seems as though he will have some other sources of income that may suffice.

There’s another consideration, and while it probably would not come to pass, it’s possible.

And that’s the solvency of the Boeing pension plan . . . there’s the possibility that it will go belly-up. Unlikely but possible.

As I recall, there’s some government agency that oversees pension plans and “guarantees” them. But I’ve also seen several articles that claim pensions are woefully underfunded. And counting on a “government guarantee”, especially considering that the economy is in the tank and also the current group of Chicago thugs running things, I’m not so sure that I would plan based on a “government guarantee”.

So if the scenario is that the pension may not be there someday, that also argues that perhaps it’s more prudent to take the full amount while it’s still available.

For these reasons, banking it, the actuarial probabilities, and the possibility of the pension completely disappearing or substantially reduced, I think I’d opt to take the full amount if I were in their shoes.
[/quote]The last few years I have read about businesses to government bodies which have decided to underfund pensions deliberately and then try to weasel out of them later. This is happening in Illinois now but the point is some companies resort to getting rid of pensions by changing the rules or being bought out and the new owner denying any liability for the pensions.

Then there is Obama and while some think that pensions are untouchable, never underestimate the rapaciousness of the government to confiscate those plans.


#5

The growth stock part depends on their risk tolerance and whether or not the pension money is critical to their survival. If it’s just gravy and they can tolerate wide fluctuations in growth stock value, maybe I’d do it.

Yes, investing likely will take care of at least inflation, whereas it’s pretty much dead money in a bank. But in a bank it’s safer. The downside of being in a bank is that it won’t grow to beat inflation, and indeed will shrink in value each year BECAUSE of inflation.

However, if they want to invest it I might go for a no load index fund. “No load” means that they will have very little management fees and with an index it will track the DJIA on the NYSE, and that has performed just as well as “loaded” funds with outrageous management fees, just because the fund is managed by some Harvard MBA (and I think that’s what RET meant by "If your parents don’t mind babysitting their own portfolio . . . " . . . get rid of the managers!.) Give a monkey a banana every 15 minutes or so, and the monkey can “pick” stocks just as well as the Harvard MBA. The guy that your parents will be paying almost, if not, the inflation rate, and thus their “managed” stocks will hardly, if at all, beat inflation.

If they choose to invest it, remember to point out that small print which the managers rely on as a fall back excuse:

“Past performance is no guarantee . . . blah, blah, blah . . .”

And as far as investing advice, it’s not really appropriate to follow what anybody says on a board (RO or any other board), so it’s better if you do your own due diligence anyway, and just take things here as maybe ideas to investigate.

(That was the RO “disclaimer”)

Watch out for “pump and dump” schemes. Stock boards are full of 'em. And tell your parents to watch out for Annuities. A lot of Annuity sales people are scammers, and senior citizens are particularly vulnerable.


#6

I definitely did mean “do not allow anyone to manage your portfolio”.
Professional portfolio managers are like cattle following a herd, their predictability and group think ways are what makes it so profitable to do it yourself.

Paying others to think for you is usually not a very efficient strategy, the time spent learning the ropes is almost always cheaper than what you spend paying someone to waste your resources.


#7

I figured you’d tell them to send the SS back, so you can get yours. I mean are they not part of the Shaggies you carry on so childishly about? How can you comdemn us old folks, and at the same time, lobby for advice so they can make the best of theirs? Audacity.


#8

good point but they are die hard blue coller dems and are concerned that the benifits they enjoy will not be available to their children and grandchildren so they wouldnt fit into the shoot the shaggies scenerio. But fun point :slight_smile:


#9

Thanks, that makes alot of since so does similar ideas from others on the board. Thanks for your insite.


#10

You’ll want to buy some precious metals. We are going to continue monetizing the debt for years and years to come. In other words, inflation. In response to inflation, precious metals not only preserve the value of wealth but they actually increase in value as well.


#11

[quote=“Tiny1, post:7, topic:37420”]
I figured you’d tell them to send the SS back, so you can get yours. I mean are they not part of the Shaggies you carry on so childishly about? How can you comdemn us old folks, and at the same time, lobby for advice so they can make the best of theirs? Audacity.
[/quote]I was looking at the local newspaper and there were two pages of obits with old people dying. This must make the liberals happy they can not draw social security anymore. After all they did not deserve it/sarcasm

I guess in one sense they are lucky because come January Obama would have killed them anyway./sarcasm


#12

That is excellent advice but now is the time to buy, next year or two may be too late the way Washington is going.

.


#13

And the accompaning advice would be to not buy any treasury or municipal bonds.

Here is a great PM website: Silver, Silver Bar, Silver Bars, Silver Bullion, Gold and More - APMEX.com

IMO the best option is to get the Eagle series coins minted by the U.S. mint. It is better to have physical PMs as opposed to stored PMs, plus storage comes with monthly fees.


#14

LOL

Interesting you should give that link. I just registered an online account with that very company.

.


#15

Haha.
I had heared from multiple sources it was great and I started buying some silver recently from it.


#16

Precious metals are seriously over valued right now. The floor is gonna drop out on that bubble within the next decade, guaranteed.

On average, the full pension makes more sense. The only exception would be if your mother is in poor health and your father in good health. If security is your goal though, life insurance is the way to go.


#17

[quote=“CWolf, post:16, topic:37420”]
Precious metals are seriously over valued right now. The floor is gonna drop out on that bubble within the next decade, guaranteed.

On average, the full pension makes more sense. The only exception would be if your mother is in poor health and your father in good health. If security is your goal though, life insurance is the way to go.
[/quote]PM’s are tied to the value of the dollar. If you think the dollar is going to get better any time soon, your kidding yourself.


#18

I agree, the 24/7 buy gold commercials have created an enormous and artificial bubble.

That is how the .com stocks were overvalued and that is how the Real Estate frenzy was fueled as well, people being convinced that they “could not lose” unless they did not jump in RIGHT NOW!


#19

Precious metals are “tied” to the same thing as every other security, whatever people are willing to pay at any given time.

If being “Tied to the dollar” is the goal then Real Estate is the safest investment, it is the first to appreciate when the dollar loses value and the last to depreciate when the dollar rises in value.


#20

People are willing to pay what they do because of the value of the dollar.

I would buy real estate, however I don’t have that kind of money.