Posted byon April 29, 2008
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There’s a basic formula for determining when you can retire: when the withdrawals on your retirement nest egg will cover your expenses. Simple right? But what if your company wanted you to make a retirement decision, and gave you two weeks to decide?
Unfortunately, that’s a situation that we’re currently facing. Our company announced a change to our pension program at the beginning of the year. We were told that the lump sums of our pension plan would go down… but we wouldn’t know by how much until a calculator was available. However, if you retire in the next two weeks, you can still get the higher amount.
The calculator was made available yesterday and here’s what it looks like for me:
Unfortunately, the change just decreased my compensation package as I am now effectively earning less than I was before. In addition, it will take me over six years just to get back to the value that I currently have.
Since I was considering becoming a stay-at-home mom before, this is really making me reevaluate my plans to change around our finances by the end of next year.
What it means for you?
Anytime you could be faced with a split-second decision. Would you be prepared to make a quick decision? What if you received the numbers and had to make a decision in two weeks?
The reality is that things can change. Companies get bought, benefit plans change, you could be offered a buy-out. Are you ready?
What you can do to prepare yourself
Many of the topics in Retirement Planning Checklist: 43 Tasks to Get You Ready can be done long before retirement. Having them handy will give you a head start to making a quick decision. In addition:
I had some things on my to-do list from the planning I did back in February. We’re almost ready to refinance (just waiting for the right rate to lock and apply), the business is going well and I put the car up for sale.
However, two weeks is going to be a really tight time line….