Ask Terry Questions Retirement planning

Retirement planning

By Terry Savage on October 17, 2019 | Financial Planning / Retirement

My wife’s former employer has notified her that she may start receiving her pension. She may take a lump sum of $550k or monthly payments of $2100 with spousal right of survivorship. My wife is 60 and I am 55. She works part-time and I freelance. Do you suggest rolling the lump sum into an IRA or taking the monthly payments?

Terry Says

First, I had to check on whether that $2100 payout over her life and yours was reasonable. So I ran the numbers (your age, hers, and genders)  at, and found the offer from the company is right in the ballpark.

BUT this is still not a good deal!  If inflation averages only the 3 percent historic rate, the value of that check — the buying power — will be cut in half in less than 25 years!  You are too young to lock yourselves into this payout!

So, if allowed, do roll it over into an IRA at Fidelity or Vanguard. They will help you choose stock funds for the long run.  Yes, you run some risk of loss — but there has never been a 20-year period when the stock market (S&P 500) lost money with dividends reinvested — even adjusted for inflation! In 25 years, if you stick with the plan, you’ll likely be glad you have the money –and you can annuitize for life at that point!

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