Pension Decisions, Part 2: Lump Sum, or Annuity Payments?
A little while back we told you about a way to take your maximum pension benefit option while potentially mitigating the income risk to your spouse with a life insurance policy. That technique is called “pension maximization.” If you have a pension, it’s just one of the decisions you’ll be faced with when it’s time to take your benefits.
Another decision you may have is whether to take your benefits in the form of an annuity or a lump sum. Which option you select can have a large impact on how much money you ultimately wind up with in retirement. Factors such as current interest rates, future inflation, and your own investing abilities may all come into play.
“Professor” Rick Plum, CFP
discusses the pros and cons of each option, and what you might want to consider when faced with this important decision, on this week’s edition of Lucia Capital Group Weekly!
Important Information:
The information provided should not be considered specific tax, legal, or investment advice and is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
Different types of investments and/or investment strategies involve varying levels of risk, and there can be no assurance that any specific investment or investment strategy (including the investments purchased and/or investment strategies devised by Lucia Capital Group (“LCG”)) will be either suitable or profitable for a client's or prospective client's portfolio, thus, investments may result in a loss of principal. Accordingly, no client or prospective client should assume that the presentation (or any component thereof) serves as the receipt of, or a substitute for, personalized advice from LCG or from any other investment professional.
You should always seek counsel of the appropriate advisor prior to making any investment decision. All investments are subject to risk including the loss of principal. This material was gathered from sources believed to be reliable, however, its accuracy cannot be guaranteed.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Examples cited are hypothetical, are for illustrative purposes only, are not guaranteed and subject to potential federal and state law amendments. There is no guarantee that you will achieve the results discussed or illustrated.
Life Insurance product guarantees are subject to the claims-paying ability of the issuing insurance company and are subject to their terms and conditions.
Annuities are long-term investment products designed for retirement purposes. Guarantees are based on the claims-paying ability of the issuer subject to their terms and conditions. Early withdrawals may be subject to surrender penalties and, if taken prior to age 59½, may be subject to an additional 10% federal tax. Annuities are not FDIC insured. Certain terms and conditions apply, so please read insurance company materials carefully.
Insurance products offered through Lucia Insurance Services, LLC (CA Insurance Lic. #0H40817). Lucia Insurance Services is licensed to offer such insurance products as life, disability, long-term care, and annuities.
Rick Plum is a registered representative with, and securities and advisory services offered through LPL Financial, a registered investment advisor and member FINRA/SIPC. The investment professionals are affiliated with LPL Financial and are conducting business using the name Lucia Capital Group, a separate entity from LPL Financial.
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