SmartAsset and Yahoo Finance LLC may earn commission or revenue through links in the content below. Buyout decisions have become increasingly common for those with a pension plan. If you get this offer, the most important questions to deal with include when you would you receive the payout, and how long you expect to live. The earlier you would receive a lump sum payout, the more it will be worth to you in retirement. On the other hand, the longer you live to collect monthly payments, they can add up to ...

Core Insights - The individual in question plans to retire at age 65 with a monthly income of $2,600 from Social Security and pension, while having monthly expenses of $1,700, indicating a potential surplus post-retirement [1][5] - Current financial assets include $40,000 in Treasury bonds, $20,000 in savings, and $20,000 in a 401(k), totaling $80,000 saved for retirement [2][4] - The individual owns a condo valued at $300,000, which will be paid off in three years, contributing to a net worth of $380,000 [1][4] Financial Considerations - The individual may need to work part-time during retirement to maintain a comfortable lifestyle, as current savings may not fully cover expenses, especially considering inflation and longevity risks [2][4][5] - A significant portion of the retirement savings, specifically $40,000, is not invested in stocks, which may limit growth potential over the long term [6] - The strategy of withdrawing 4% annually from the stock investments could sustain the individual financially, but the additional income from part-time work is emphasized as beneficial [7]

Core Insights - The decision to delay Social Security benefits can be more complex than it appears, as it may not always result in a higher total lifetime payout due to longevity risk [2][3] Group 1: Delaying Benefits - Delaying Social Security benefits can increase monthly payments by up to 8% per year if postponed past full retirement age (FRA) [1] - However, if an individual delays benefits until age 70 but passes away at 72, they would only receive two years of payments, potentially resulting in a lower total payout compared to claiming earlier [4] Group 2: Longevity Risk - Estimating longevity is uncertain, with the average life expectancy in the U.S. being approximately 78.4 years, but individual outcomes can vary significantly [5] - Many individuals may live into their 80s and 90s, while others may not reach the average life expectancy [5] Group 3: Breakeven Analysis - Financial advisors often use a "breakeven age" analysis to determine the age at which cumulative benefits from delaying Social Security exceed those from claiming earlier [6] - For example, an individual eligible for $2,000 per month at age 67 would need to live to about 78 years and eight months to break even if they claimed at age 62; if they wait until age 70, the breakeven age increases to roughly 80 years and five months [6]