• Question
  • the company I work for offers a monthly pension or a lump sum when you retire. How do I determine w

    Asked by someone from Naperville, IL on 1/24/2013

    I work for Alcatel-Lucent. I am thinking of taking a retirement package. The package will include 9 weeks of severence. Plus I need to determine if I want to take my monthly pension payment of $2793.56 (for life) or a lump sum of $590,244.59. My concerns are if I take the monthly pension what if the company goes bankrupt or is bought by another company. How could my monthly payment be impacted by the possible changes in the company. My concern of taking the lump sum is that if it is not invested wisely it will not last sufficient time. The market has not been very secure the last several years. If I take 590,244.59/2793.56= 211.29/12 = 17.6 years. I am 52 and healthy so I expect I will live more than 17.6 years.

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  • Categories: Asset Protection, Private Pensions, Retirement Planning, Pensions and Retirement Benefits

Answers

  • Steve 


    NewRetirement

    San Francisco, CA

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  • Hi,

    Great question. One of our advisors, Bud Hebeler, has a great write up that you should review.

    http://www.newretirement.com/answers/bud-hebeler/lump-sum-vs-pension.aspx

    You're smart to consider the credit-worthiness of the pension plan. It's probably worth a call to the pension plan administrator to get a report on the health of the plan (how well funded it is and what assumptions they are making about future returns).

    If you'd like to talk to one of our pre-screened advisors on our network - please click on the "Get a Free Consultation" button on the right.

    Hope this is helpful.

  • Login to rate this answer:   Answered on 1/25/2013
  • NewRetirement User

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  • I guess the first question I would ask is, Does AL pay this from their own coffers or do they use a third party to pay the income. Many companies will have an insurance company assume that liability. You should check that first. In any case the financial markets are soo manipulated these days by computers, unless you have a great reason not to take the monthly income, I would make sure that you at least have a guaranteed monthly income coming in that pays basic expenses. Play with the balance if you have extra. Good Luck. jamieheadfinancial.com

  • Login to rate this answer:   Answered on 1/29/2013
**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.