Money problem-take the money or not

I guy calls into a Sunday morning financial advice talk show.

He says he is 62 and planning to retire in December. He wife is already retired and receiving a NYC teachers pension (amount not stated).

His pension will be $40-45,000 a year he says, but he can take a $800,000 lump sum as an alternative.

He has $1,000,000 in his 401k and another million in non-retirement funds in CDs kicking off “about” $40,000 in annual interest he says.

Here is his “problem.” Should he take the $800,000 lump sum and roll it over to an IRA? He says they live on $40-$45,000 a year and he is afraid that if he takes his pension it will put him on a higher tax bracket.

What a problem to have.

If he is worried about taxes now wait until he hits the required minimum distribution ten years from now. Not to mention the likelihood of higher tax rates. 😱

With all that cash in hand, I say take the annuity pension.


  1. When you have that much potential income who cares about a few more bucks in taxes and overall he probably pays less tax in the long run with the annuity pension.


  2. I was always told that you’ll be in a lower tax bracket when you retire. Then one day I realized that by the time I start collecting my social security, 401K, and along with my pension, I’ll be “earning” as much as when I was working. Had I known, I would have done things much differently. Sure, I am trying to be smart about taxes but you know what? I paid a high tax rate when I was working so what is the difference in retirement. It is not like the tax money being paid will prevent me from living. I would like to not pay anymore taxes to the government but it doesn’t make sense not to take any of your money just to keep it from Washington. Spend it very wisely and go have fun while you able.


  3. Nice problem to have. I guess his next question will be should he take social security now, or wait until he’s 70?


  4. He should feel GUILTY for having done so well financially and give most of it away to those who choose not to work and/or save….it’s only fair right ?

    Liked by 1 person

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