Ask Terry Questions Surviving spouse refund selection.

Surviving spouse refund selection.

By Terry Savage on September 26, 2023 | Financial Planning / Retirement

Hello. I have just retired with a pension from IMRF. I now need to decide whether to take a lifetime annuity of $95 a month or take a lump sum refund. We are talking about a sum of $12,000. If I roll it over into my traditional IRA, no tax withheld. If I want lump sum refund, I will lose 20%. I realize that I need to be retired over 10 years to collect full amount. As I’m trying not to take social security until I’m 70 (66.5 now), would I be better off to take annuity? Thank you

Terry Says

The Wall Street Journal just posted an article on that calculation. Here’s a link to it, which you can open if you’re a subscriber.

Basically a lot depends on your investment skills. If you can do a rollover and think you can take the risks to make your money grow faster, then by all means give it a try.
This is a relatively small amount — but it IS a guaranteed lifetime payment if you take the annuity. The only problem is that inflation will eat away at the spending power of that guaranteed check. At only 3% inflation, your buying power will be cut in half in 25 years!

The one thing you should NOT do is take the money and pay the taxes. The only exception would be if you have a lot of high-interest credit card debt and could use the money to pay it down (and then stick to a promise never to charge up your card again!).

Recent Financial Planning / Retirement Questions



a personal
finance question