Take Your Pension as Lifetime Income or as Lump-sum?! 4 Things to Consider

(don’t forget to checkout the video too)

Pensions are a wonderful tool for creating a guaranteed income stream that you can never outlive in retirement.

But, should you take the income from YOUR pension or should you create retirement income for yourself?!

4 items to consider in taking your pension as income or as a lump-sum

✅ Can You Get a Higher Income Guarantee on the Private Market❔

If your pension income is much higher than the private market, then you should likely take the income from your pension.

If the income is higher with a private company, you’re probably better taking a lump-sum and creating income yourself.

✅ What is the survivor benefit❔

Often times if the pension owner passes away the survivor benefit is only 1/2 or 2/3 of the pension income (so the surviving takes a pretty big pay-cut).

If done through a private company, you can guarantee the income at 100% for both spouses….

If your pension doesn’t allow for a lump-sum distribution, and the non-pension-owner spouse stands to have a pretty large income gap if the pension owner dies, then you should consider a life insurance policy to cover that income gap.

✅ What does your tax-free retirement look like❔

If you take the pension income it is all likely to be taxable and you won’t have the ability to reposition assets into tax-free buckets.

If you take a lump-sum, you have more flexibility of WHEN you turn income on which allows you to shift money around so you can take your income tax-free and (ideally) prevent social security from being taxed as well.

✅ Have You Considered Long-term Care as Part of Your Retirement Income Plan❔

Lastly, if you take a lump-sum, you can provide more flexibility for long-term care as most private contracts provide added benefits to allow for early access in the event of a long-term care need.

Some pensions don’t allow for the lump-sum option and sometimes it doesn’t make sense to take the lump-sum. 👎🏻

But, it ALWAYS makes sense to review the options before you select your payment option!👏

Let’s chat 💬😎