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Brown Cafe UPS Forum
UPS Retirement Topics
Got pension payment offer.
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<blockquote data-quote="overnite" data-source="post: 4244220" data-attributes="member: 78504"><p>That's because the difference in the time value of money between the lump and the pension payment stream has decreased with the passage of 3 years.</p><p></p><p>If you took the lump in 2016, you had 19 years to invest it before 65. if you take the lump now, you only have 16 years to invest it. The closer you get to your retirement age the higher the present value of the lump is. however you also closer to receiving the pension payments, so the present value of your pension payments is also higher.</p><p></p><p>Think of it this way, had you taken the lump in 2016 properly invested you would have expected to grow in the 3 years, and the higher 2019 offer reflects that.</p><p></p><p>So in real present dollars, the 2019 offer is not "better" than the 2016 offer, it just reflects that 3 years closer to retirement the present value of your pension benefit is worth more than it was 3 years ago regardless of whether you take that benefit as a lump or as a stream of future payments.</p></blockquote><p></p>
[QUOTE="overnite, post: 4244220, member: 78504"] That's because the difference in the time value of money between the lump and the pension payment stream has decreased with the passage of 3 years. If you took the lump in 2016, you had 19 years to invest it before 65. if you take the lump now, you only have 16 years to invest it. The closer you get to your retirement age the higher the present value of the lump is. however you also closer to receiving the pension payments, so the present value of your pension payments is also higher. Think of it this way, had you taken the lump in 2016 properly invested you would have expected to grow in the 3 years, and the higher 2019 offer reflects that. So in real present dollars, the 2019 offer is not "better" than the 2016 offer, it just reflects that 3 years closer to retirement the present value of your pension benefit is worth more than it was 3 years ago regardless of whether you take that benefit as a lump or as a stream of future payments. [/QUOTE]
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Got pension payment offer.
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