“My husband is a teacher and will be retiring at the end of this school year. He has been in PSERS since he started teaching in 1987. We went to a conference to review his retirement. He has many different options to give him income and then something to me as well when he passes. We’ve got that part pretty well figured out.
He also has almost $250,000 that he can either take out or leave it.
Which should we do?”
Well, it depends.
There are a number of factors that will affect your decision. Do you have enough income – without keeping the $250,000 in the pension – to pay your bills and be happy and healthy? If not, strongly consider leaving it in. If so, strongly consider taking it out. Not sure? Roll it to an IRA and defer the decision for the future.
Do you have children or grandchildren that you would like to provide for in your estates? If so, roll the $250,000 into an IRA and explore ways to get those funds to your heirs. If not, then the question reverts back to do you need the income.
Finally, a lot depends on how you think about ‘things’. The thought of a higher guaranteed pension provided to you by PSERS may give you a warm glow and tingles all over. Then by all means grab it. Conversely, the thought of giving up control of a quarter of a million dollars may give you hives (and I will note that the vast majority of our clients in this situation felt this way). If so, roll those dollars into your IRA and get good advice managing it throughout your (hopefully) long retirement.
If you have questions or comments, please send them to Gene@AskMtM.com