• Question
  • Pension provider is offering lump sum payment equal to 15 years of monthly pension not sure if I

    Asked by a 69 year old woman from Charlotte, NC on 6/18/2012

    Pension provider is offering lump sum payment equal to 15 years of monthly pension- not sure if I should take the pay out or continue with monthly checks.

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  • Categories: Lump Sum or Pension?, Pensions and Retirement Benefits

Answers

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  • One thing to consider is, if you take a lump sum you can purchase an Indexed Annuity from an insurance company, receive a monthly withdrawal for life and recieve a possible death benefit for your heirs.

  • Login to rate this answer:   Answered on 6/18/2012
  • Steve 


    NewRetirement

    San Francisco, CA

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  • Hi,

    There are a number of considerations for your question, including:
    1) The credit worthiness of the company / organization backing the pension and the pension plan itself (is it fully funded)
    2) Whether your pension has a COLA (cost of living adjustment built in)
    3) Whether your pension provides for spousal benefits
    4) Whether you have enough income to pay for your retirement without the pension
    5) What it would cost you to purchase replacement income through a solution like an annuity (it's probably a less efficient approach)

    Your pension plan may also offer a blended solution where you can take it partially as a lump sum.

    There's a good article on the NewRetirement site from Bud Hebeler here:
    http://www.newretirement.com/Answers/Bud-Hebeler/Lump-Sum-vs-Pension.aspx

    You may also want to talk to a fee only financial advisor - you can find one here:
    http://www.newretirement.com/financial-advisor-marketplace.aspx

    Good luck!

  • Login to rate this answer:   Answered on 6/18/2012
**All above answers are provided as general information only. No warranty is made regarding the fitness or accuracy of the information provided in this answer. You should seek advice from a licensed CPA, attorney or CERTIFIED FINANCIAL PLANNER™ as to your unique financial situation.