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  1. #1

    Take Pension as Annunity or Lump Sum Payout?

    My FIL is eligible for his pension in the next months. He is debating his options and I wanted to get some advice on what you would choose and why?

    Single Life Annuity: $714/mo
    10 YR Certain: $651/mo
    50% Joint: $640/$320
    75% Joint: $608/$456
    100% Joint:$579.32/mo
    Lump Sum: $116k

    No major health issues besides a little more than normal wear and tear from yrs of working outside. Spouse is 1yr younger. Total retirement accts ~350k. No long term care insurance. He plans on working till the end of the next yr and then starting SSI and spouse plans on working as long as physically possibly.

  2. #2
    I wonder what his expenses are going to look like and what income he'll be getting from other sources (social security and any sort of pension from his spouse). I'd be far more tempted to take one of the annuity options if I knew it was going to be sufficient for a comfortable retirement

  3. #3
    I think thats a good point, but it is also tempting to take the lump sum payout and get a mutual fund. Based on several different balances fund returns over the past 10 years they could potentially get a better yearly payout doing this.

  4. #4
    Be careful about that. The past 10 years have been a tremendous bull market. It is unlikely that those returns will continue long term.

  5. #5
    I know my DH is getting the 100% joint!

    Statistically men die before woman. So many of my friends mom's were left with just SS because their husbands didn't take the joint option and it was a struggle for them.

    I don't think you said how old they are so I'd be thinking about health insurance too if they aren't old enough for medicare. And then with health insurance who knows how much money you need?? You can be well today and sick tomorrow.

    My vote is the 100% joint so your MIL is covered with a bigger payout after his death.

  6. #6
    that 's 7.38% of the lump sum (for single life).. I think that's better than anything he can get in the open market right now .. unless he's really old

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