Take Lump Sum or Monthly Pension Payments?

This was the subject of a recent question to Money Magazine senior editor Walter Updegrave. The choice came down to whether you wanted the security of a monthly check for the rest of your life (monthly pension payments) or the freedom of investing the lump sum however you chose, with a few wrinkles. Updegrave says it’s more complicated than that but even after you look at the pros and cons of each, the crux of the decision has to do with just that… freedom or security.

The big con against monthly payment is that it’s rarely adjust for inflation, which is the enemy of fixed income, and the big con against the lump sum is that you won’t be able to manage it correctly. You might spend it all or make poor investment decisions.

Unfortunately, there is no universal right or wrong choice, but here is some advice in case you’re facing such a decision.






One response to “Take Lump Sum or Monthly Pension Payments?”

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