If you have a pension that you’ll be able to draw upon during retirement, then there’s a good chance that you’re in a better financial position with respect to retirement than many others. The more sources you have to draw upon for retirement income; not just pensions, but also Social Security benefits, as well as your IRA and 401(k) accounts; the better.
But many pensions provide their beneficiaries with a choice on how to receive their benefits: either to receive monthly payments for the rest of their lives, or to receive a single lump sum as soon as they retire.
Here’s some retirement advice if you’re faced with this choice, how do you decide what’s right for you?
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Unless you have a plan for how you can take that large sum and make it work for you, or if you’re concerned that you may not be able to stop yourself from spending it all too quickly, then you may wish to take your pension as monthly payments.
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In light of some of the developments that have occurred over the past few years with respect to city and state pensions for some governments, as well as many private company pensions, your pension’s health is something to pay close attention to.
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On the other hand, if your retirement nest egg is relatively small then you might want to choose a monthly payout so that you can be more comfortable that your living expenses are more likely to be covered each month.
The decision of whether to take a pension payout as a lump sum or as a monthly income stream will depend on your individual situation. By taking an honest look at your needs and your other financial assets you’re more likely to make the right decision for you.
Tags: lump sum, pension, retirement advice, retirement planning
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