Spreadsheets to evaluate a lump sum vs annuity pension

One question we frequently receive is, "Should I take the lump sum or the pension?" In today's video, I will discuss several factors to consider when making this important decision.

Here are some key points to take into account:

1.) Evaluate the present and future value of the pension.
2.) Assess the financial strength of your employer.
3.) Consider your life expectancy and health conditions.
4.) Decide if you will elect a survivor benefit.
5.) Choose between a life annuity, a life and period certain annuity, or only a period certain annuity.
6.) Determine if your pension provides a cost-of-living benefit rider.
7.) Understand if there are any other benefits, such as healthcare coverage, that are lost without a survivor benefit.
8.) Consider the payout rate of the annuity.
9.) Understand that higher interest rate environments result in lower lump sums, and lower interest rate environments result in higher lump sums.
10.) Assess the need for life insurance to support your surviving spouse if you choose the lump sum option. Also, consider if you qualify for life insurance.
11.) Evaluate your comfort level with managing investments if you opt for the lump sum.
12.) Determine if your pension is covered by the Pension Benefit Guaranty Corporation (PBGC).

By considering these factors, you can make a more informed decision about whether to choose the lump sum or the pension.

Below are additional articles, links and resources you may find helpful.

https://www.retirementbudgetcalculato...
https://www.irs.gov/retirement-plans/...
https://www.cnbc.com/quotes/US10Y
https://www.pbgc.gov/wr/find-an-insur...
https://www.pbgc.gov/wr/benefits/guar...
https://www.barrons.com/articles/reti...
https://afc.soa.org/#calculator
https://www.metlife.com/about-us/news...