Should I take my pension in a lump sum or take the guaranteed income each month?
Like many questions we face in finance the IFW philosophy of never say never, never say always… It
depends, rings true in this situation.
One of the first things to consider when deciding on this question:
Am I healthy and do I have a spouse or other family member I have to take into consideration.
If you are in declining health and only have a child or non spouse beneficiary it MAY make sense to take the lump sum because if you live a shorter life the money will stay with the pension.
This is the one situation I have seen where it MAY make sense to take the lump sum!
In most situations the “cost” to purchase the guaranteed income streams the pension provides is a lot more than the lump sum offer will provide.
The pension makes this lump sum “offer” because it limits their liability and is financially better for them not YOU. Additionally there are questions of which pension option to select. This is a very important decision and one that should not be taken lightly as making the wrong decision could be very costly.
In essence these pension options are similar to the idea of “insuring” your pension for someone else. If the insurance could be purchased for a lower cost you may want to consider buying your own insurance privately. This once again depends on your health. If you are really healthy it usually makes sense to self insure.
This is a critical decision that has to be made carefully.
I hope this information will help YOU GET THERE!
Rees Bridges brings a unique value to the IFW as both a highly accomplished creative professional and a successful financial services executive to serve in his role as Senior VP, Marketing & Communications.
Over the last decade Rees has served as the lead marketing & communications professional for a Fortune 500 Financial Services firm. He oversaw all advisor marketing strategies, client communications, and the entire firms branding and marketing initiatives.
Rees continues to pursue his passions as a creative professional & musician for over 30 years, with an impressive profile and reputation as a designer, performer, teacher, and studio musician. Here is a little secret: He serves in the role as an international clinician for Mapex drums, Paiste Cymbals and held the record for world’s fastest drummer between 2006 and 2007.
Rees grew up in London, England and currently resides in Miami, Florida. When not at work, he enjoys spending time with family and friends, traveling, and indulging in his passions for music and creative pursuits.