My parents’ estate (in addition to their home) had mainly good cash flow, nice, well kept apartments (3 buildings, a 5 unit from remodeled building, and two newly built by dad’s company - 10 unit with two townhouses at end with 8 - 2 BR apts, and a 6 unit apt building with one bedroom units and all having garages) which were top in the town (dad had sold his business property when he retired - he owned and ran a construction business with full cabinet shop) and had earlier sold his commercial property, and we also had the 5 unit apartment building near the commercial property, and were able to sell that building which allowed the new commercial owner to have a lot more area with the parking area. Brother planned and had gotten more garages built so the rest of the apt units had at least one garage (the town houses had a 2 car garage each) - it allowed the buildings to go condo if needed, but then we had a buyer for the two newer buildings (they were next to each other and shared the pavement between the buildings). The 5 children had a good cash out with closing the trust (I took a small property/land in FL and sold that on my own). If the two newer apt buildings were 50 miles away in the bigger city/both state capitol and state flagship school, we would have kept them - I would have been willing to go there to manage them after my brother, until niece/nephew in that city would be old enough and interested in taking over – and then maybe sold if the right price was presented. The appreciation and higher rents made it better there to hang on to them.
My parents only did a one year gift of $10K to each of us 5 years earlier – I think they saw some immediate needs with most of us with families. Dad had health issues and died young (64); brother helped mom with the estate/apartment management until she died at age 77.
It was important to mother-in-law to leave a bit of a legacy, and there was a little bit of life insurance and the family home. It seems the house can be sold in a heart beat. Brother in law there is taking his time, as a family member may want to buy the house. It needs a new kitchen and some other repairs, but has good bones, and a new main floor bed and bath with large shower, and washer/dryer moved to main floor.
I believe some of the rising building costs (price of lumber etc.) are going to keep having older homes with great locations being renovated or flipped.
DH and I need to downsize, but not until we figure where we want to move. Neither DDs own their own place yet, and I expect that will happen in the next few years - one is for sure settled in that city, the other may get determined in the next few months. DH and I are willing to use some of our funds but need to ‘strategize’. Have some home upgrading to do as well prior to us selling our home - but that seems off in the future as DH wants to stay in our city.
I suspect there will be money left someday to our children (and house too if we are both here til the end, though that may not happen). That would be nice. But what I can’t get hung up on is fancy methods to shield them from tax, which would likely be only state tax anyway unless the federal estate tax rules change dramatically. If “bonus money” gets taxed, so be it.
@jym626, I’m not sure. I think it may be because they are small companies. But is BCBS’s rule, not ours.
We have a first world problem. Do any of you use a concierge doctor? Do you think it is worth it? We are considering switching from a concierge doctor to a company called One Medical that is what I would call concierge-lite.
We are in a PCP group that also has a NP. Not concierge. We get good service. The group is kind of key with having the medical coverage. We don’t typically have situations that need walk in MD care, but there are those available clinics available, one tied with the hospital.
My D used a concierge doctor when she lived in Chicago. She had some health concerns at the time, and she appreciated being able to directly connect with her doctor when she had questions or issues. She uses a “regular” doctor now, and she is fine with it. I guess it depends on what you might need the doctor for, as well as difficulty of scheduling in your area (D no longer lives in the city, and health care is readily available where she now lives). To be honest, it would have been nice if my mom had had a concierge doctor when she was showing signs of dementia.
Guess that would depend on whether your medical needs would benefit from having a concierge or concierge-lite primary care physician versus any non-concierge primary care physician (including both small group and large group), and whether that benefit is worth any extra cost that may be involved.
Today we are leaning towards the half lump sum, half monthly payments. This is a good problem to have but I think that if we take the entire sum in monthly payments, our income will be too much once we draw social security and I think it will affect our Medicare payments.
Glad my post was helpful. When deciding on pension settlement options, make sure you consider the survivor benefits (if available). Also, when thinking lump sum vs. monthly, think about what it would take to create the monthly yourself from the lump sum (meaning if I invest $X, how could I create the same income stream as the monthly checks). And, am I willing to risk doing that vs the guarantee of the monthly income? Generally speaking, if you can get close by investing, that’s a great option as it leaves you with far more control, but it’s not guaranteed. Not knowing any of the variables, I like the sound of half and half but the numbers need to work out in your favor.
If one of us lives 25 more years, the interest on the monthly annuity will be 5%. Obviously less if we both don’t live another 25 years.
So do we transfer the risk to ourselves and the market or take a monthly sum? That’s the big question.
There are no bad options which is a great place to be.
Also both of our children are doing very well financially and there inheritance is really not a part of our thinking. If they get something, great, it will be gravy. Just as it will be when our parents pass away.
Sometimes taking the lump sum offers a boost in value because the company is happy to have you off their books. My husband’s lump sum options was significantly more than the value of his pension account for just this reason. So, we took that.
We talked it over with our financial advisor before we made a choice. Had we chosen the monthly pension, we would not have taken the survivor benefit option - it was way too low. We would have taken out a life insurance policy on H in that case. In the end, we decided on the lump sum (we only had the two options), due to having adequate non-pension retirement savings. Believe me, I didn’t sleep for weeks after making that decision! A couple years later, I now feel confident that the decision was the right one for us. We continue to use a financial advisor, which I know some people consider an unnecessary expense. It’s very necessary for us … especially for our peace of mind.
Pension settlements are about both the numbers and risk tolerance (do you feel comfortable taking the risk vs. the guarantee). The strategy you describe (no survivorship benefit and life insurance) is very powerful IF the numbers work. The logic is that you receive a larger pension monthly payment (because of no survivorship). You take part of the difference and purchase a guaranteed death benefit life contract. When you pass, your spouse gets nothing from the pension but receives the death benefit (tax free). If the benefit is big enough, it then acts as a new lump sum and can be invested to distribute what would have been the survivorship benefit. If it works (numbers), it’s great. if not, not. An advantage to that type of planning is controlling the survivorship piece. The life policy makes sure someone (spouse or other person if spouse passes first) receives the balance, whereas with a pension, the survivorship piece goes away if the survivor passes first. It also ensures a full benefit is paid (through life beneficiary) meaning it doesn’t matter how long both live. In a pension, when the participant and survivor die, so does the benefit. If that happens early in retirement, your pension balance never gets paid. The life policy ensures that someone receives the pension benefit.
Lots of moving parts. We’ve implemented the strategy where it made sense and it works great. A little more complex than most want and of course you need to qualify for life insurance.
As far as concierge medicine, I have my regular doctors that take my health insurance, and a concierge doctor that is a specialty doctor that deals with issues like hormone supplementation. Out of network healthcare benefits reimburse some of this. It’s worth the additional cost for this doctor and this clinic.
Can you provide some general tax information in regards to taking a lump sum, presuming the lump sum is not rolled over? How does that play into such a decision?
Not comfortable giving tax guidance on a forum, especially not knowing your situation, but in a vacuum, you wouldn’t want to take a lump sum that is not a rollover because it will all be income in the yr you take it. Again, not knowing your tax situation, I can’t say yes or no to the planning as you may have large deductions that mitigate tax. If that’s the case, the advantage of taking the distribution vs. rolling it over is future growth will be taxed differently (income blended with long term gains vs fully taxable income). You or your CPA should do a thorough analysis of the tax implications. Don’t know too many folks who would want to take the non - rollover lump sum because they could control the tax by distributing from a rollover whenever they want.
I love reading people who know their stuff. I get overwhelmed by the number of options/things to consider, but I like to know about the things I should educate myself on. I think all y’all have many more assets than I do so I probably don’t really need to know about all this.
My company no longer has the generous “old plan” pensions, but when they converted they set up a cash accumulation plan. When I retired last year it was worth a little more than a year’s salary. I opted for the annuity (pension like) payout. The terms were good, per financial advisor review. I already had a decent amount of 401k to worry about AND longevity in the family, so guaranteed monthly payment for life was appealing.
My husband and I each picked 50% survivor benefit on our small pensions. It’s a gamble guessing the future, and this is how we decided to hedge our bets.
Thanks. That was exactly the response I was looking for. General information, as it seems to me that this whole retirement thing is like an elephant, and we’re all like the 3 “blind (wo)men” trying to figure it out. And looking at it from multiple angles really helps me.
On concierge doctors - my hub has one; I do not. I don’t really see much difference (at all) in our care/ability to get appointments/doctor’s willingness to run tests. To me the key was finding the right general practice. I asked my friends who are really demanding and who know tons of medical folk. Then trusted their referral LOL.
When my husband took his lump sum it was deposited into a rollover account, therefore it was not considered income for that year. When we withdraw the money it will be income (just like any other IRA/401K withdrawal).
