#### perez99

##### Recycles dryer sheets

I'm not as clear cut when comparing those outcomes with the SWR rate when taking the lump sum and invest.

If taking the monthly pension for living expenses, then I'm losing purchasing power every year. Got it. However If I take the lump sum and invest, I believe it will likely require a withdrawal higher than SWR (say 4%) to match the monthly pension.

If above is correct, I don't understand the right way to compare these options.

In my case the lump sum and monthly payment seem to be fair when using immedateannuities.com. I don't want to assume significantly superior market performance, which will bias the comparison toward lump sum and invest. Yet, the SWR is based on historical..

This pension will be between 7 to 10% of yearly income. Majority of income will be from portfolio, so I'm ok with taking lump sum and invest. Is just not as evident to me the mathematical (?) way to understand this in relation to SWR.

To be clear: Computing the average market gain that will allow the lump sum & invest approach to match the monthly nominal pension payout (means no inflation adjustment) results in 6.2%. The withdrawal in year 1 is 5.3% and increases in the following years. This is higher than SWR 4% and yet it only match the pension nominal payout. All calculations with an ending portfolio balance of zero at the end of 30 years.

How is this better than taking the monthly payout? There is something missing in my thinking or my math here. I can only conclude that one hopes that market is better than 6.2%, but even it its not, your heirs get to keep some money assuming you don't deplete it before..

Any pointers?

Thanks!