Ask Terry Questions Pension Fund — dealing with lump sum

Pension Fund — dealing with lump sum

By Terry Savage on October 13, 2022 | Financial Planning / Retirement

My wife received a letter from a former employer telling her that she can receive her pension. She can take it monthly or one lump sum. She would like to take the lump sum. She is 62 years old and would like to roll it over so she doesn’t incur any penalty. What would be the best thing to do?

Terry Says

Because she is so young, and the impact of inflation on a fixed pension would be so dramatic over her lifetime, she should definitely do a rollover.
Call Fidelity or Vanguard and tell them you need to do a ROLLOVER — a direct transfer to an IRA Rollover account.

Have all the employer information in front of you when you call. They will handle all the details so there is no tax implication. They contact her employer.

The only decision she will have to make is how to invest the money when it is moved. I’d recommend (for right now) putting it all in a money market fund for starters. Then move 10% to the Equity/Income fund on the 5th of every month, until 70% is moved into that fund. Leave the balance in the MM fund.

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