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Optimizing annuity, pensions, social security to retire.

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Twoply
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Optimizing annuity, pensions, social security to retire.  Reply with quote  

Hello everyone!
I'm 42, married with 2 kids (10+12), a mortgage with $155k left and no other debt.

I was in a carpenters union for over 20years but decided to pursue other avenues. I have a pension through that union that I can draw on at 62, which would give me 3,600/ month. I can start to draw on it at 55, but ill lose 25%, giving me about $2700/month.

I have $95k sitting in an annuity with that union that keeps losing money. I am allowed to withdrawl it with no penalty from the union anytime.

I now work for a large metropolitan city and am enrolled in their pension system. I would like to retire around 55, but I'm thinking realistically about 60.

My question is, what should I do with this annuity? I have to get it out of where its at now to stop the bleeding, but what to do with it?

I was sitting in an Edward Jones office talking to a financial guru about maybe 75% into somewhat stable mutual funds that would hopefully make a 6% return and 25% into more aggressive avenues like stocks.

I'm an overthinker by nature, so here I am asking for advice.

Is there a lesser known, more sneakier way to build this up bigger that is not as popular?

Thank you in advance.
Post Thu Aug 25, 2016 5:36 pm
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oldguy
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You're pretty well loaded up on annuities - the carpenters pension annuity, the $95k annuity, the City pension annuity, and your SS annuity. (The SS annuity is the best one, it is annually adjusted for inflation.)

I would sell that $95k annuity, even if there is a penalty/tax. And put that money into a longterm SP500 Index Fund, they have an average return of about 11%/y - $90k would be about $1.2M at age 67 - that would bed a nice 'outside' benefit, not tied to your age, not tied to annuity rules or taxation. The SP500 grows mostly tax-deferred - and tax-free to your heirs.

If you can get out of the City annuity, I would - and instead invest that money every month into a 401/403-type plan. Those are especially good wealth-builders, especially if there is a 'match' - and it lowers your annual income tax bill.

If you retire early, you can tap into that carpenter pension. And then the SS annuity at 62. (I retired at 60, that' s what I did - and I left the 401k for later.)
Post Thu Aug 25, 2016 10:29 pm
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oldguy
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quote:
longterm SP500 Index Fund, they have an average return of about 11%/y - $90k would be about $1.2M at age 67


BTW, here is a site that you might use. http://politicalcalculations.blogspot.com/2006/12/sp-500-at-your-fingertips.html#.V8B_va2yDSZ

Note that the most recent 30-yr block had an average return of 9.99%/y (7/1986 to 7/2016). So - they don't ALL get an 11%/y return, that's an average.)
I use the no-load providers for ours, Vanguard for one, Fidelity for another - they turn out to be about the same - ie, same returns, similar fees, good service.
Post Fri Aug 26, 2016 5:52 pm
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ArtsMoneyTalk
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have you considered high dividend yield stocks?
you can get the steady cash flow and there is potential upside to sell for gains if they go up in value, and use to reinvest in other dividend paying stocks.

also might want to look into master limited partnerships, they're traded like stocks but as the name suggests are limited partnerships. they have some pretty nice yields 8-15%. it does complicate your taxes a bit so if you do them yourself you may want to look into it first before buying. here's a website to get you started:
http://www.mlpassociation.org/

or you can just give it all to me Wink

hope this helps
Post Fri Sep 02, 2016 8:20 am
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