Pension Distribution — lump sum or 10 yrs
I’m 70.5 have a $100K pension. Can’t figure out how to decide between a lump sum distribution or a 10 year life annuity. I’m in pretty good health and right now I’m working and don’t need the monthly cash flow yet. I’m taking my social security now
My goal is to preserve as much as possible for my kids. How do I decide. What figures do I use?
Terry Says
A certified financial planner can help you calculate whether the lump sum being offered is a fair trade off for 10 years of guaranteed payments. It’s purely a math question. But, Remember those fixed payments will be impacted by inflation, and subject to taxes.
However since you do not foresee needing to use the money, at least until you are much older, if they allow you to ROLL the money directly into an IRA, you might be better off. You can invest very conservatively Yes, you’ll have to take RMDs starting the year you turn 73. And those will be taxable.
So again it’s a math problem, weighing thevtradeoffs,
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