Pension Annuity vs. Lump Sum: How to Decide

Written by: Marty Shields

We are seeing more situations where our clients who are close to retiring from large companies such as GE, National Grid, Golub and Verizon are being offered early retirement packages to incentivize them to leave a few years earlier than they expected. These packages frequently offer an option to take a lump sum from their pension instead of receiving a monthly annuity paid out over their life time. Beyond the question on whether they should take the early retirement package, understanding whether to take the lump sum distribution versus the annuity is a significant decision with long-term impacts and the answer is not often black and white. As we provide guidance on the best way to approach this decision, there are several criteria we use as our primary decision points.

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