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bort_saver · 10-31-2007, 02:35 PM

Can he then claim social security and become a burden on the state?<br /><br />In the UK pension funds have to be used to buy an annuity, ostensibly in order to prevent that kind of thing, which in my view is very unlikely. No doubt the real reason is to support the insurance industry.<br />

hansen · 10-31-2007, 02:35 PM

I believe one joins the queue.

deli08 · 10-31-2007, 02:35 PM

it's their money to spend

jonny · 10-31-2007, 02:35 PM

retirement won't be as much fun when all the money and women are gone

hansen · 10-31-2007, 02:35 PM

Then he's drunk, laid and hoarse.

Actually there are limits to how much you can withdraw from an IRA without penalty. The theory of SS is that you've paid in, so you get it back (almost as if you bought an annuity) but in reality that's not how the money is handled. You're not a 'burden on the state' but you're getting back because you paid in.

And if you read your annual statement, you'll see that the amount you're scheduled to receive is only an estimate and you might not get anything at all.

doom · 10-31-2007, 02:35 PM

sell there blood.

doom · 10-31-2007, 02:35 PM

He ends up singing for his supper!

doom · 10-31-2007, 02:35 PM

Social security is nowhere near enough to live off of. So they're more likely to become a burden on their families.

Most companies don't do pensions, these days. At best it is matching funds in an investment account. And yes, they can blow it all and be out of luck.

realtime · 10-31-2007, 02:35 PM

In the US, Social Security and private pensions are paid concurrently.

A typical retiree might get $13,000/yr as a social security benefit while also having a $12,000/yr pension entitlement.

If that retiree decided to take that $12,000/yr as a lump sum, say $150,000, there is nothing stopping him from buying as much wine, women, or songs he wants.

However, he'll be stuck living on $13,000/yr (with inflation) for the rest of his life.

This is a poverty-line level of income in many states so that person may have the ability to apply for welfare.

The more insidious problem though is the person who takes the $150,000 lump sum and thinks he can invest it and come out ahead. This person dutifully invests his money and only draws it down slowly but winds up running out of money in his early 80's with no way to get it back or develop a new income.

realtime · 10-31-2007, 02:35 PM

In the US.... Pensions and Social Security are 2 TOTALLY different things..

The former is a voluntary contribution that has a finite amount and would be what was blown in this example..

The latter is an endless monthly stipend the retiree gets until the day they die, regardless of whether they had a private pension or not.

The only difference the private pension makes.... is how much of his social security check ends up being Federally taxable as income....

10-31-2007, 02:35 PM	#1
bort_saver Greenhorn Join Date: Jul 2006 Posts: 26 Rep Power: 6	In the US what happens if someone on retirement takes his pension funds and spends them on wine women & song? Can he then claim social security and become a burden on the state?<br /><br />In the UK pension funds have to be used to buy an annuity, ostensibly in order to prevent that kind of thing, which in my view is very unlikely. No doubt the real reason is to support the insurance industry.<br />

10-31-2007, 02:35 PM	#2
hansen Greenhorn Join Date: Jul 2006 Posts: 17 Rep Power: 0	In the US what happens if someone on retirement takes his pension funds and spends them on wine women & song? I believe one joins the queue.

10-31-2007, 02:35 PM	#3
deli08 Piggy Bank Join Date: Jul 2006 Posts: 51 Rep Power: 6	In the US what happens if someone on retirement takes his pension funds and spends them on wine women & song? it's their money to spend

10-31-2007, 02:35 PM	#4
jonny Greenhorn Join Date: Jul 2006 Posts: 17 Rep Power: 0	In the US what happens if someone on retirement takes his pension funds and spends them on wine women & song? retirement won't be as much fun when all the money and women are gone

10-31-2007, 02:35 PM	#5
hansen Greenhorn Join Date: Jul 2006 Posts: 17 Rep Power: 0	In the US what happens if someone on retirement takes his pension funds and spends them on wine women & song? Then he's drunk, laid and hoarse. Actually there are limits to how much you can withdraw from an IRA without penalty. The theory of SS is that you've paid in, so you get it back (almost as if you bought an annuity) but in reality that's not how the money is handled. You're not a 'burden on the state' but you're getting back because you paid in. And if you read your annual statement, you'll see that the amount you're scheduled to receive is only an estimate and you might not get anything at all.

10-31-2007, 02:35 PM	#6
doom Greenhorn Join Date: Jul 2006 Posts: 13 Rep Power: 0	In the US what happens if someone on retirement takes his pension funds and spends them on wine women & song? sell there blood.

10-31-2007, 02:35 PM	#9
realtime Greenhorn Join Date: Jul 2006 Posts: 27 Rep Power: 6	In the US what happens if someone on retirement takes his pension funds and spends them on wine women & song? In the US, Social Security and private pensions are paid concurrently. A typical retiree might get $13,000/yr as a social security benefit while also having a $12,000/yr pension entitlement. If that retiree decided to take that $12,000/yr as a lump sum, say $150,000, there is nothing stopping him from buying as much wine, women, or songs he wants. However, he'll be stuck living on $13,000/yr (with inflation) for the rest of his life. This is a poverty-line level of income in many states so that person may have the ability to apply for welfare. The more insidious problem though is the person who takes the $150,000 lump sum and thinks he can invest it and come out ahead. This person dutifully invests his money and only draws it down slowly but winds up running out of money in his early 80's with no way to get it back or develop a new income.

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