Should I Take a Lump Sum or Monthly Payout for My Pension?

The answer depends on what percentage of the monthly payout divided by the lump sum and how long your breakeven is. If you have a very high payout to the lump sum, it may be better just to take the monthly amount.

The other thing that you have to take a look at, especially if you’re married or you’re providing for somebody else, is what is the reduction of the monthly payout when you’re providing for that significant other in your life.

Another thing to consider about the lump sum is, when you die with a payout, for all intents and purposes, that ends. With the lump sum, that’s in your name, and depending on how you use it and depending on how it lasts and depending on how it’s invested, it can eventually pass to your family, to your heirs, to your children. A lot of people like the fact that they have some flexibility.

In this particular case, this would definitely be the question for a financial advisor to help you ascertain as to what is the best approach.

Parkshore Wealth Management is a family-owned, independent, fee-only Registered Investment Advisor serving the greater Sacramento area with an office in Roseville, CA. We partner with financially responsible individuals and families who are eager to take positive steps that will allow them to use their money to build the life they desire. The firm is led by Harold Anderson, CFP®, and Daniel Andersen, CFP®, both members of NAPFA, the country’s leading professional association of fee-only financial advisors.