Pension Distribution Options to Consider

Should You Take a Lump Sum or Monthly Payments for Your Pension?

As many Baby Boomers reach retirement age, they are faced with the dilemma of whether to take their pension in a lump sum or monthly payments. It’s not a decision to be taken lightly and needs advice from an experienced financial advisor. Should you eschew a lifetime income or go for the full amount at once? First, keep in mind that you’ll only receive a pension as long as the company you retired from remains in business. On the other hand, if you take the lump sum payout, then it might not last that long due to annual inflation, which has recently skyrocketed.

Choosing the right Pension Distribution

If you need a fixed amount of income to supplement your monthly budget, then a monthly payment would be the best solution. If you have more flexibility, taking the lump sum is a better option as you can control how you invest those funds. Longevity is another consideration. With the lump sum, you should have money available to pass along to your beneficiaries upon your death, whereas when you pass away, the payments end.

Investing Your Pension

If you do opt for a lump sum distribution, our team can help you put a financial plan together that manages your risk tolerance while help you grow your nest egg. By electing for a monthly payment option, you are guaranteed a certain amount each month, but that money does not grow like it could in a low-risk fund that can yield modest returns. To better weigh the pros and cons, schedule a complimentary consultation with the financial planning pros at Safe Harbor, or call us today at 614-760-0670 to get started.
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