Here are several key issues you'll want to include in your decision:
1) Will your decision just impact you or do you have a spouse that
would benefit from a joint & survivor pension if you die first?
2) How is your health (and that of your spouse, if applicable)? Is
there longevity in the family genes? Pension payouts factor in average life expectancies, so if you’re
likely to live longer than the average then receiving a pension for life may be
3) If you take the lump sum (presumably rolling it to an IRA), how
are you at managing a substantial investment pool? Or will you involve an
adviser? Realistically, what’s the likelihood that you will do better investing
the funds rather than receiving a pension?
4) How are you at “rationing” distributions from a lump sum pool
vs. receiving a regular income from an outside source? Some folks take the lump
sum, do a “yippee,” and spend it all in a few years leaving nothing for their
5) What other resources do you have (and those of a spouse, if
applicable) such as Social Security, IRAs, general investments, rental property
income, and so on? Do you have a plan for how to best make it all work together…and
which meshes better, the lump sum or lifetime payout?
6) How important is it to you that your heirs receive an
inheritance if you (and spouse, if applicable) die prematurely? A lump sum
rollover to an IRA will (potentially) provide that. However, typically (not
always) there’s nothing left for heirs at the death of the last beneficiary of
a lifetime payout pension.
You have a very
important decision with irreversible consequences. I hope that this helps.
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