When it comes time to cash out your retirement, it usually comes down to a decision of whether you want to take a lump sum or income for life (or a mix of both). Here are some reasons why you should consider a lump sum.
1. You can control your investments
If you take the lump sum, you can turn around and invest that money on your own. You get to make the decisions and you’re in the driver’s seat, this of course could be a good or a bad thing!
2. You aren’t afraid of inflation
When you take a lump sum and are able to invest that money, you can protect yourself from inflation. When you take income for life, the income may not be adjusted for inflation (in fact, very few are) so your check loses buying power year after year.
3. Bird in the hand…
When all those airlines went bankrupt, the first to go was the pension… income for life may mean income for the rest of your life or income for the rest of your company’s life, whichever is shorter. If you company goes under, the Pension Benefit Guaranty Corporation, which insures pension plans, only pays out pennies on the dollar.