Broker Check

Pension Lump Sum Evaluation

The Single Biggest Decision Facing Retirees

We know there is much skepticism when it comes to pension buyouts. This is most likely the single biggest financial decision these retirees will ever make, and it comes in a time of much uncertainty.

There are several factors to consider before taking the buyout, such as longevity. If you’re expecting to live well into your late 80s or even 90s, the buyout may not be for you. But if you’re not in the best health then the buyout will look more attractive.

Other factors to consider include: leaving a legacy to your beneficiaries, interest rates being near all-time lows along this bull market potential running out of steam, social security uncertainty, not to mention corporate and legal risks.

“There are two options when taking the buyout, the first being to take the money and buy a yacht,” said Richard Paul, President of Richard W. Paul & Associates, LLC. “Although I do not recommend this option because Uncle Sam would claim approximately a third of it in taxes.”

The second option is to roll it into an IRA. This would allow you to take control of the money and invest it how you want to.

Since every situation is different, there is no simple answer as to whether or not to take a pension buyout. What appears to be the best for you may be disastrous for another. The best thing to do is meet with a qualified financial planner and take a good look at your financial picture.

Our complimentary pension lump sum evaluation process allows you to sit with one of our investment professionals and weigh the pros and cons of taking the pension lump sum. We will discuss your goals, expenses, other assets that can provide an income, and provide you with a side by side retirement projection of taking the lifetime payments or taking the buyout.

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