How the “6 percent rule” can help with a pension plan payout decision

A general guide

[By staff reporters]

As a general guide, according to financial advisor Wes Moss, if your monthly pension check equals 6 percent or more of the lump-sum offer, then you may want to go for the perpetual monthly payment. If the number is below 6 percent, then you could do as well (or better) by taking the lump sum and investing it, and then paying yourself each year (like a personal pension that you control).

Here’s how the math works:

Take your monthly pension offer and multiply it by 12, then divide that number by the lump-sum offer.

Example 1: $1,000 a month for life beginning at age 65 or $160,000 lump sum today?

$1,000 x 12 = $12,000 divided by $160,000 equals 7.5 percent.

Here, you would have to make approximately 7.5 percent per year on the $160,000 to earn the same $12,000 a year. Earning 7.5 percent a year consistently and over many years is a tall order. Taking the monthly amount in this case (7.5 percent is greater than 6 percent) may likely be a better deal over the long haul.

Example 2: $708 a month for life or a $170,000 lump sum today?

$708 x 12 = $8,496 divided by $170,000 equals 5 percent.

In this scenario, the monthly pension amount is offering you a return for life of about 5 percent. Remember, for the first 20 years even earning zero percent, you could do the same before you run out of money. If you made even a modest return (say, 2 percent per year), you would be far ahead of what the monthly pension would pay you. In this case, 5 percent is less than the benchmark of 6 percent, so you might be better off taking the lump sum of $170,000.

When You Should Take the Lump Sum Over the Pension

Assessment

Your thoughts are appreciated.

MORE FOR DOCTORS:

“Insurance & Risk Management Strategies for Doctors” https://tinyurl.com/ydx9kd93

“Fiduciary Financial Planning for Physicians” https://tinyurl.com/y7f5pnox

“Business of Medical Practice 2.0” https://tinyurl.com/yb3x6wr8

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Risk Management, Liability Insurance, and Asset Protection Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™8Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

Happy Friday 13th

See the source image

Triskaidekaphobia

Triskaidekaphobia (/ˌtrɪskaɪˌdɛkəˈfoʊbiə/ TRIS-kye-DEK-ə-FOH-bee-ə, TRIS-kə-; from Ancient Greek τρεισκαίδεκα (treiskaídeka) ‘thirteen’, and Ancient Greek φόβος (phóbos) ‘fear’) is fear or avoidance of the number 13.

It is also a reason for the fear of Friday the 13th, called paraskevidekatriaphobia (from Greek Παρασκευή (Paraskevi) ‘Friday’, Greek δεκατρείς (dekatreís) ‘thirteen’, and Ancient Greek φόβος (phóbos) ‘fear’) or friggatriskaidekaphobia (from Old Norse Frigg ‘Frigg’, Ancient Greek τρεισκαίδεκα (treiskaídeka) ‘thirteen’, and Ancient Greek φόβος (phóbos) ‘fear’).

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CITE: https://www.r2library.com/Resource/Title/082610254

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GO FUND ME: Medical Campaigns Reveal a Big Problem with Health Care

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By Jules Lipoff, MD: Senior fellow at the Leonard Davis Institute of Health Economics and an assistant professor of clinical dermatology at Perelman School of Medicine, both of the University of Pennsylvania. Erica Mark, medical student at the University of Virginia, contributed to this article. The opinions expressed in this article do not necessarily represent those of the University of Pennsylvania Health System or the Perelman School of Medicine.

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If you follow the news or your social media feed, you know that crowdsourcing medical expenses is increasingly popular for financing health care costs. In fact, you might have contributed to one; 22 percent of American adults report donating to GoFundMe medical campaigns.

CITE: https://www.r2library.com/Resource/Title/082610254

As of 2021, approximately $650 million, or about one-third of all funds raised by GoFundMe, went to medical campaigns. That staggering amount of money highlights how dysfunctional our health care system is, forcing people to resort to crowdsourcing to afford their medical care — but it’s not surprising. In the United States, 62 percent of bankruptcies are related to medical costs. This should be a wake-up call to address and reform the system further.

Related: https://medicalexecutivepost.com/2021/12/30/does-crowd-sourcing-democratize-the-health-care-insurance-system/

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ESSAY: https://www.msn.com/en-us/news/politics/gofundme-medical-campaigns-reveal-a-big-problem-with-health-care/ar-AAXabGB?li=BBnbfcL

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COMMENTS APPRECIATED

Thank You

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