Should You Take Your Pension as a Lump Sum?

The answer depends on multiple factors, such as what your alternative investment options would be, whether you want to leave money to a beneficiary and more.

A stack of hundred dollar bills on top of a pile of hundred dollar bills.
(Image credit: Getty Images)

Are you getting ready to retire and deciding what to do with your pension? Making the wrong decision can be costly, especially considering that, most likely, you won’t be able to change it. Plus, the impact of these decisions is usually 20 years or longer. Many of our clients nowadays are taking the lump sum option. Let's talk you through the pros and cons of doing so to see what can make the most sense for you.

Note that all pensions are unique, so it’s important to examine the numbers in detail to determine which option is best. With our clients, we might run multiple scenarios to truly understand their situations and goals before we make decisions. As you will see, two people with the same pension options may choose different option depending on their situation.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Joe F. Schmitz Jr., CFP®, ChFC®
Founder and CEO, Peak Retirement Planning

As Founder and CEO of Peak Retirement Planning, Inc., Joe Schmitz Jr. has built a comprehensive retirement planning company focused on helping clients grow and preserve their wealth. Under Joe’s leadership, a team of experienced financial advisers use tax-efficient strategies, investment management, income planning and proactive health care planning to help clients feel confident in their financial future — and the legacy they leave behind. Joe has also written a book, titled I HATE TAXES. You can find Joe on YouTube by clicking here, where he creates educational videos for those in or near retirement. If you would like to talk to Joe’s team, you can schedule a meeting by clicking here.