Should you lump-sum your pension or take periodic payments?
What about survivorship options?
And how do you determine the best age to take your pension?
Many pensions have a myriad of options to choose from…
How can you decide which option fits both your goals and retirement plan?
We tackle these questions and more in this week’s Wealth Wednesday.
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I need help deciding whether or not to take a lump sum or monthly payments in the next seven months when I turn 65
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My pension wud be $1840 p mo or $230K lump sum. Seems my break even wud be much h Sooner than that example and wud make Traditional IRA TOO High? I want to do Roth Conversions to Lower not Raise it? 403b is now $440k the wud make it $675K?
I really enjoy the videos you put out there – very informative. Thank you for all the effort.
I've read that it's important to keep ERISA (e.g. rollover 401k) and non-ERISA (e.g. contributory IRA) IRAs separate in order to preserve federal asset protection status of the ERISA funds. Are funds from a pension rollover considered to be ERISA funds?
OK – now that I have mulled this over, here's a thought. If I am offered a lump sum, I can roll that into an IRA – which would in effect, delay my pension benefits – letting them grow tax deferred (right?). I have a rollover IRA now that I want to convert to a ROTH. By delaying my pension "payout" I could convert a larger amount each year (at a more favorable tax rate) before I take social security at age 70. (I would obviously have a larger pool of money to convert). AND – if I wanted to, at age 74 or 75, I could take a portion of what is left in that IRA (if anything) and buy an immediate annuity with joint survivorship. (I know you don't like annuities – but here is my thinking): my wife is 8 years older. If she passes before me, her SS benefits would stop. The annuity would protect me [(or her, if I die first]. NOW – if I managed to convert ALL of my IRA to a ROTH – I would have more control over what I take out. But the funds could still be subject to market risk. (Of course, tomorrow morning, I might have a different approach to all of this. BUT I do like to beat the heck out of an idea before I implement it…..)
Saving this information for next year. I am curious if my former employer will throw a lump sum offer at me. I was going to take the joint survivor option – but now I will weigh the advantages of everything they put on the table.
This podcast was so focused and Well thought out. I learned a lot.
I had two pensions from my company when I retired…a "legacy" pension which I took as a lump sum and invested. And an annuity pension (100% survivorship) (no lump sum option).