Question for the Money Doctors
Question submitted on Oct 8, 2019.
QuestionI'm trying to decide if a lump sum payment is better than an annuity- two different options in a pension plan settlement. In a low interest rate environment, what factor should I consider?
There are a lot of options, including the two that you mentioned: lump or annuity (typically lasts your lifetime or your spouse's lifetime). There are many variations of these options, including: part lump / part annuity, roll the lump into an IRA, and pick your own annuity. This is a big decision and the interest rate is just one part of the calculations. A CPA/PFS in your area can help (visit www.findacpapfs.com to find a specialist in your area). Be prepared to share your age and your spouse's age. Best of luck.
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