Pensions: One Lump (Sum) or Two?

Dave Hutchison, CFA |

We are often asked by those fortunate enough to have a defined benefit pension plan – should I take my benefit as a lump sum at retirement?  Employers today typically provide an online calculator to help illustrate the benefit amount as a lump sum and as an annuity payment.  The annuity payment is often illustrated in several ways including payments that have guaranteed payout terms.

So, what to do?  There is no single answer for everyone.  In analyzing the situation for clients, we gather information and recommend the best course of action after that analysis.

Some things to consider: Do you have concerns that your life expectancy might be shorter than average?  Will your other sources of income cover your expected retirement costs?  Would you like to be able to transfer your pension assets to your heirs?

In speaking with people about their pensions, we seek to get all of their questions answered and then advise them on a course of action that is right for them.