Death v. Retirement

"Nothing is certain in life except death and taxes," said someone like Benjamin Franklin more than two hundred years ago. The problem--and blessing--of the certainty of death is that I don't know when it will occur, and right now I need to place a bet. I am going to bet short on my own life. Is that sad, or empowering?

After my father's parents died, my dad figured that their average life span would be his life expectancy. My paternal grandfather died when he was 79, my grandmother 78. My maternal grandfather lived a healthy life into his nineties, and my grandmother died when she was 81. My mother was adopted, so her parents' life expectancy doesn't bear much impact on hers. One could say that their lifestyle could impact her longevity, but now that my mother is in the late stages of Alzheimer's, all of that is out the window.

Last month, I got a phone call from my former employer asking if I would like a lump sum distribution for my defined benefits retirement program (a.k.a., a pension). Instead of the lump sum which I would add to my IRA, I could take out a monthly payment of about $100 now, or have a greater monthly payment of around $700 when I turn 67.5 years old.

Normally, I would crunch a bunch of numbers and figure out which would leave me with the most money in the end. The challenge here is I don't know when the end will be, and I am betting on my own death and health before I die.

A few years ago, I used my grandparents' age of death and figured my life expectancy would be about 80 or so. Both of my grandparents smoked, and I don't. I figure I'd get an extra year or two added, maybe five.

Then my mother got Alzheimer's in her late sixties. She is seventy-one now. She has a chance to make it to seventy-two in October, but it is very unlikely she will make it to seventy three. I did a quick google search to see if there is a greater chance that I will have Alzheimer's. There is lots of data, which I am not going to look through now. In short, Alzheimer's doesn't run in families, but I do have a three times greater chance of getting Alzheimer's than the general population.

So what to do? I am taking the lump sum. If I do get something bad early on, I'll need the money so I can have proper care. $700 a month won't help much if I need care that costs in the thousands a month. At some point, the money stops when Jack or I die, too. There are few different options, but one says if I live for 5 years after taking payments, my family get nothing.

Jack and I have a decent amount saved for retirement, and we should have the house paid off in a few years. I am not as worried about typical months expenses as am I about the catastrophic costs if I need to be in a nursing home for a period of time. If I am normal and healthy, I can live on the cheap. If I am not normal or healthy, then what? I can reasonably say I don't want to be on life support, but what if I end up like my mom? We can't pull the plug on her because there is no plug to pull. I could as if I get to be non-responsive, put me in the middle of the woods alone for a week and I'll die of natural causes, but I don't want my family to have to make that decision either or get charged with murder.

If you asked me what to do before my mom had Alzheimer's, I might have said I'll bet that I'll outlive the terms of the retirement amount. But now I am betting short, and taking the lump sum.