Midpack
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An article on a topic that comes up from time to time...M*'s five decision points.
I'd add if you take the lump sum, and then have second thoughts 2 months, 2 years or 20 years later - you can still "buy" a pension income (annuity) whenever. If you take the pension, you're locked in! And at a historically bad time (#4 below).
But of course you should compare the employer pension and lump sum amounts vs available annuity income costs first and foremost. They should be comparable - if not, the rest may not matter.
Pension Lump Sum or Annuity: 5 Swing Factors
I'd add if you take the lump sum, and then have second thoughts 2 months, 2 years or 20 years later - you can still "buy" a pension income (annuity) whenever. If you take the pension, you're locked in! And at a historically bad time (#4 below).
But of course you should compare the employer pension and lump sum amounts vs available annuity income costs first and foremost. They should be comparable - if not, the rest may not matter.
M* said:
- The first is the all-important pension health.
- The second are the other income sources that you have.
- Consideration three, my longevity--how long I think I am going to live.
- The next is timely, that's interest rates, we all know they're very low right now.
- Number five, if you do take the lump sum, that money is not going to invest itself, so my skills as an investor should also play a role in this decision.
Pension Lump Sum or Annuity: 5 Swing Factors
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