Lump Sum or Pension Payments - Which to Choose

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I’m retiring soon and trying to decide whether or not I should take one time lump sum payment or a monthly pension payments until I die.  As with some of you, if I were to die first, my wife would continue to receive part of my pension until she dies. This is a tuff decision and I’m not sure which way to go, here’s what I’m thinking about. 

The big question of course is not knowing how long we are going to live. If you take the lump sum, how much money will you make by investing wisely versus the continued stream of pension payments.

About 20% of the people taking the lump sum, have it gone in five years.  30% of retires with lump sums also worry about running out of money. On the other side you know employers offer lump sum payments for a reason, the lump sum payments help their bottom line not yours.

Pros for Taking the Lump Sum Cash

  • Your Company’s has poor financials and might not back the pension
  • Maybe you have doubts about the management team
  • Are you and investor or work with a credible and trustworthy financial adviser
  • Maybe you don’t really need the money and have retirement covered. Lump sum can give you some fun money to play with

Pros for Taking the Pension

  • Your married and your pension plan offers survivor benefits
  • If you like to buy things and spend money… you can only spend what you have!
  • Significantly less anxiety

I’m going to keep adding to this list so send me your ideas.  My first thought is stay with the pension, but I still have a few weeks to decide.

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