Podcast Episode 270: Pension Lump Sums, Legacy Planning & Other Mailbag Questions
Created: September 16, 2022
Modified: September 16, 2022

Podcast Episode 270: Pension Lump Sums, Legacy Planning & Other Mailbag Questions

What You’ll Learn:
It’s time to open up the mailbag once again and answer the questions that are on your mind. Today’s episode will cover pension payments, paying off debt with retirement money, legacy planning, and changing financial advisors.

All types of financial situations come through our office but there isn’t a lot we haven’t seen. That’s why we enjoy answering your mailbag questions. It gives us a chance to think through some new scenarios and help you understand what factors into each decision.

On this episode, we have four different questions we’ll do our best to tackle, starting with pension payments. So this person is about to turn 65 and wants to continue working but a previous employer’s pension plan requires them to take money as soon as they turn 65. The payment can be taken as a lump sum or monthly installments, but which decision is the better choice? The answer will be different for everyone and you need to talk with a professional to make sure this gets right because it’s irreversible.

Now, a couple of general considerations need to be taken into account. First, if you receive the lump sum will you be disciplined enough not to spend it all immediately? The second is how long would it take for that monthly payment to add up to the lump sum and where will you be in your life when that happens? Ultimately, our general lean is toward the lump sum because you can invest it and generate a return that might equal the monthly payment, which gives you the best of both worlds.

The next question we have on the show is from a person thinking about pulling money out of his retirement savings accounts to pay down his debt because he’s saved really well. The initial reaction to this is to tell you not to do it.

There’s plenty we need to know about the debt, but we’re hard-pressed to say take the money out of your retirement because it doesn’t fix the root problem of spending. We’ll talk through some of the factors in the podcast, but that credit card debt isn’t guaranteed to go away and stay away while your retirement suffers.

The third question we tackle touches on legacy planning and how to determine which assets to leave to family versus the church. This is a great question because it does matter what you leave, especially as it relates to taxes. Leaving different types of accounts to the church could mean much more of your money stays with the church rather than going to the IRS. It speaks on the importance of tax planning and something you’ll want to sit down and truly layout.  

Alright, the final thing we discuss on the show comes from someone that’s considering changing advisors because their portfolio hasn’t done too well. The problem is their current advisor is a close family friend so they’re wondering whether it’s worth risking that relationship by changing.

A couple things we’d say here. First, your friend should understand that there is a difference between personal and professional relationships. Second, go ahead and get another advisor to give your portfolio an evaluation and see if your own assessment is correct. You might find out that your advisor is doing a pretty good job overall.

Either way, take advantage of our Money Map review because this is what we’ll take a look at for you.

Here’s a look at what we discuss on this show:

0:24 – Mailbag question on pension payments

3:06 – Mailbag question on taking retirement savings to pay house

6:22 – Mailbag question on legacy planning

8:17 – Mailbag question on changing advisors

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