Should I Take the Lump Sum Option From My Pension?

Should I Take the Lump Sum Option From My Pension?
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Carrie Schwab-Pomerantz
Updated:

Dear Carrie: I’m about to retire, and I have to decide between taking a lump sum or lifetime income payments for my pension. I’m leaning toward the lump sum. Is this a good idea?—A Reader

Dear Readers: My first thought is to say congratulations! A pension in any form—whether taken as a lump sum, as lifetime income (sometimes called a pension annuity) or as some combination of both, is a valuable and increasingly rare benefit. This is an important retirement decision. Take your time and weigh all the options carefully. A lump sum can seem alluring, no doubt, but consider tax implications as well as the potential benefits of spreading out payments over a longer period of time.

Carrie Schwab-Pomerantz
Carrie Schwab-Pomerantz
Author
Carrie Schwab-Pomerantz, a certified financial planner, is president of the Charles Schwab Foundation and author of "The Charles Schwab Guide to Finances After Fifty."
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