Should I take a lump-sum payout or monthly payments?
- What is a pension?
- Do I have to do anything to manage my pension?
- What if I leave my company before I retire?
- How does vesting work?
- When can I access my pension money?
- Can I take out a loan from my pension plan?
- Should I take a lump-sum payout or monthly payments?
- What are the advantages of taking a lump sum?
- Should I invest my lump-sum payout in an annuity?
- What's the difference between a single-life annuity and a joint-and-survivor annuity?
- Will I pay tax on my pension payouts?
- How should my pension affect my retirement planning?
- Will having a public-sector pension affect my Social Security?
Sorry to do this to you, but the best answer is: It depends.
Steady payments: Most people choose a monthly payout, also known as a "life annuity." Having that steady income can make for less stress than taking a big lump sum, especially if you aren't an experienced investor.
Lump sum: If you take a lump sum, you must assume responsibility for how the money is invested and how much you can afford to spend each month. One danger with a lump sum is that you may be tempted to spend too much today, leaving you short of money down the line. By choosing a steady monthly payout, you'll avoid the temptation to run through your pension stash.
But there are other factors to consider, too. For more see What are the advantages of taking a lump sum?
