Thread regarding Ford layoffs

I’d love to see that math.

I am 57 and went with pension. Almost all in my family live until 90's. Assuming I will live to 85 and inflation stays near the historic average of 3% the pension is much better than the lump sum

Retired in 2017. I took the lump sump, bought my own annuitity with a death benefit, and invested remainder. Did this with the advice of a financial advisor. I too did not want to be dependent on Ford long-term,

Honestly - these lump sum discussions are almost useless - there are too many variables for each family that make any advice meaningless. You must do the homework yourself and with financial advisors (get multiple opinions) to make your decision.

I always say - these are good problems to have!

People tend to undervalue the skills required to invest with proper risk management. If you are planning to invest your money directly into equities, options or ETFs, you are competing against wolfs. Stock market is the only type of arena in the world where any average joe can go and compete against the Michael Jordan of any sectors. Think about that for a second, it's complete insanity.

If you've never manage your own money before, you are questioning whether or not you will be able to manage your lump sump (>$1M) on your own going against the Michael Jordans of the investment world. There's a chance you could do it, but it's slim. Sure, some might argue, that all you have to do is invest in ETFs and play the long game. But here's the thing, when you are 62, the long game really isn't that long. You want to maintain a certain lifestyle and probably can't stomach a secular bear market, which we haven't had in over multiple decades.

Some people had already mentioned that they had friends who've done that and lost all of their money. That scenario is quite common than most would think. Suppose you have $1M and you invest it all in ETFs. Then the market takes a downturn and corrects by 20-30% so you lost $200k-300k. The natural reaction for most is to panic sell and lock in the paper loss. So if you were banking of 7-8% per year of return and a 4% draw down with the $1M, your plan is completely shattered but your draw down is going to continue because you still have to live. As the drawn down and failure to launch mentality sets in, this whole plan will downward spiral into the abyss because climbing back from a 20-30% loss with only $1M is very difficult especially with a limited time horizon.

Having said the above, I'm not suggesting that you don't attempt to take lump sump. I want to show you the reality of things and if you want a stress free retirement, Ford pension is probably the most risk averse way to go. Your only risk is if Ford declares bankruptcy and if your fund is no where close to being fully funded but that's something only you would know.

Good article to read:

https://www.google.com/amp/s/amp.cnn.com/cnn/2019/03/20/economy/lump-sum-pensions-retirement/index.html

Excerpt: Retirees who tried to reinvest the lump-sum payments would almost inevitably lose out — especially women, who tend to live longer than men and are more likely to run out of money in retirement.

But there was no requirement that companies disclose the imbalance, and retirees were taken in by promises from financial advisers that they could do a better job with the money.

"You'll never be able to replicate the annuity you're getting from the pension plan," said Karen Friedman, policy director of the Pension Rights Center. "You're getting 20% to 30% less than what the pension could buy, and you're going to try to regain that in the stock market, it's basically impossible."

Also interested in this thread. Similar situation to OP. Parents still living in late 80s. I am leaning towards pension. I am nervous about Fords longer term viability.

If I don’t secure another job, I am planning to start withdrawing from 401k @ 59.5 to reduce tax liabilities later and also to defer starting social security. My full retirement age is 67 which is 11 years from now.

If you take the lump - you have to act like an adult and be responsible. I'm struggling with how someone lost everything - poor decisions/lack of knowledge - just like athletes who make millions and manage to end up bankrupt.

Hire a financial advisor - it s---s paying them, but there aren't any do-overs in this situation!!!

Personally, I would go with the pension. Is there longevity in your family? A co worker took the payout 15 years ago, invested it, and lost it. Hard to believe. It happens. Are we going into a down term? Interested in this thread.