Created: July 2, 2020
Modified: May 14, 2024
Episode 6: Should I Take a Lump Sum Pension?
Have your question answered on the Money Wisdom Question Series!
Thank you for joining me for Episode 6 of my NEW Money Wisdom Question Series, where I film answers to common financial and retirement investment questions in 2 minutes or less. Today I want to talk about receiving a pension and the options for taking the payment.
Traditional Pension:
A traditional pension is when you take the guaranteed stream of payments from your company when you retire. You get guaranteed monthly checks for as long as you live or you can put a spouse on there, so it’s guaranteed for both you and your spouse. That’s the advantage; guaranteed for as long as you live – you can’t outlive the pension. The disadvantages are that you lose flexibility and control.Rolling Your Pension Money to an IRA:
You can take the money and roll it over to an individual retirement account (IRA). First of all, that’s a tax-free rollover. It doesn’t trigger any taxes. What happens now is, you can decide how much you want your monthly payments to be. You can stop and start them. You can increase them over time to protect against inflation. Also, you can take chunks of money out from time to time while maintaining monthly payments to take a trip, to buy a gift, or pay for a grandchild’s college education. You bear the investment risk if you do that, but what you gain is flexibility and control over the money.In Conclusion…
Everybody’s situation is different, so get some professional advice on that, but make sure you investigate all the possibilities for your situation. Thanks for joining me and I hope you found this information helpful! P.S. If you enjoyed this topic and want to learn more, get our free retirement book, “The Lump Sum Pension Payment Guide“. P.P.S. Feel free to submit questions here for a chance to have them answered!Information presented in our podcasts is considered current as of the created date. Over time, some information presented may become stale. We recommend you consult with your Financial Professional before making any changes based on information contained here.
Johnson Brunetti is a marketing name for the businesses of JB Capital and JN Financial.
Investment Advisory Services offered through JB Capital, LLC. Insurance Products offered through JN Financial, LLC.
The guarantees provided by any type of insurance contract are based on the claims-paying ability of the insurance company.
Related Resources
-
Income Planning 101
You’ve spent the last few decades saving for retirement but are you truly prepared? To help address any concerns or uncertainties you may have, you need an income plan – one that considers every f… -
Frequently Asked Social Security Questions
Almost every American is impacted by Social Security in some way, so it’s no wonder that it’s one of the most frequently asked topics in retirement planning. When and how you start taking benefits… -
Maximizing Your Social Security Income
Social Security can serve as a safety net for many retirees, sometimes acting as a primary source of income. However, the program is highly complex with over 500 ways to claim benefits. Even one o… -
How Much Money Can I Spend in Retirement?
“How much can my spouse and I realistically spend in retirement at age 62 with $1 million saved?” Today’s hypothetical couple is asking the very question that most pre-retirees ponder when gearing… -
What Should My Tax Plan Be at Age 65 with $1 Million?
Approaching retirement with $1 million saved is an impressive milestone, but turning those savings into a sustainable income stream requires careful planning. At age 65, many retirees face the cha… -
What to Consider Before Moving in Retirement
If you have the liberty to relocate in retirement, does that mean you should? Maybe you’re a snowbird who wants to live down South full-time, or maybe you want to stick it out in the cold and spen… -
Dodging the Tax Torpedo
When envisioning the next chapter of your life, the impact of taxes can often be overlooked or forgotten altogether. The reality is, without the proper planning, you may be at the mercy of an impe… -
What Habits Should I Unlearn Before I Retire?
Today’s insightful question explores the behavioral finance side of retirement planning – specifically, which financial habits you should leave in the rearview as you transition into retirement. … -
How Can You Understand and Improve Your Credit Score?
In retirement, your credit score is still relevant in achieving and maintaining financial independence. The question is, how can you best understand and improve your score to reap the benefits of … -
RMDs and You
Tax-deferred retirement accounts like IRAs and 401(k)s have allowed your savings to grow without any immediate tax burden. However, once you reach a certain age, the IRS requires you to begin maki…
