• Question
  • Pension annuity vs Lump Sum

    Asked by someone from Bonney Lake, WA on 7/15/2017

    I work for a major American aerospace company (company name starts with a B). I am retiring at 59 1/2. My wife is one year older than me. I have a choice between a pension annuity or lump sum in two separate retirement plans with the company. Between my wife and I we have $1 million in 401K assets, another $150K in traditional IRA, $75K in Roth IRA, and about $250K in non retirement accounts and no debt. I am leaning toward a strategy of taking the annuity which with Social Security will cover my existing living expenses and then planning to let my various accounts grow untouched for 5 to 10 years before I plan to tap them when inflation begins to eat away at the value of my pension annuity. What do you think about this plan? I suppose another strategy could be to take the lump sum since I have a decent amount of assets to rely on to get me through retirement.

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

Answers

  • Steve 

    Steve 
    NewRetirement

    San Francisco, CA

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  • Hi,

    One of our advisors Bud Hebeler who also worked for the same company wrote up his thoughts on the pension lump sum vs annuity question here: https://www.newretirement.com/answers/bud-hebeler/lump-sum-vs-pension.aspx

    I'll also ask him to weigh in on this.

    Best,

    Steve

  • Login to rate this answer:   Answered on 8/3/2017
  • NewRetirement User

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  • What advantage did you get from them?

  • Login to rate this answer:   Answered on 10/31/2019
**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.