Retirement Crossroads: Lump Sum Vs. Pension And The Test That Helps You Decide | Wes Moss

If you're torn between choosing a lump sum payout and a monthly pension payment the 6% test can provide the clarity you need to make an informed choice! Wes Moss breaks down the math behind the 6% test with examples, how inflation impacts these payments, as well as what this decision means for your retirement.
Read more about lump sum payouts versus pensions and the use of the 6% rule: bit.ly/3WukrHc
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[@dantheman6607]

I have a pension and almost everyone takes the lump sum to have control over their money and possibly leave it to their family if they didn’t spend it all

[@jiggeplaya7182]

I have this exact option in my company. Very useful information!

[@pickandstrum]

Thanks I am retiring today and have been looking for this sort of information very helpful!

[@dantheman6607]

Did you take the lump sum ? Just curious.

[@MisterUrbanWorld]

@@dantheman6607 8 months later, still waiting on pickandstrum to respond

[@cruisecrazy]

Thank you for this great video that explains the math and decision factors so clearly. My pension works out to 8% of the lump sum offer. I’m just worried because my company will be turning over the pension to a yet unnamed insurance company. Not sure how this will affect future pension payments, but I should be covered by the PBGC. Thanks again for sharing such valuable information.

[@outlaw565]

I heard that PBGC is in the red .you might want to check it out. If they go bankrupt that would not be good for you. And there’s no saying that they won’t go bankrupt in the future.

[@yourdailyblockchain]

Thanks for the vid - this helps. With today's calculation - looks like my pension % works out to about 10.9%

[@ro6384]

mine works out to 7.9%. Half of my pension includes COLA. I have no heirs. I feel more comfortable doing the monthly I think, paying a tax bill on the lump makes me feel sick lol. What to do?

[@danasimmons2513]

You have the option of rolling over a Lump sum into an IRA and deferring taxes until you withdraw or RMD's
You would still pay taxes on the monthly annuity option as well.

[@danasimmons2513]

Mine is around an 8% return and as long as I live it will work out well for the monthly annuity option but offers no COLA. I am still leaning towards the monthly because I have other monies in tax deferred, brokerage and Roth savings and could use some income in the interim so I can defer SS.

[@landctrain]

Most important to remember is that when you die so does your pension (single life annuity) and when you have the lump sum you have something to pass on to heirs. Inflation eats up your monthly checks over the years and makes the money almost worthless after 10 plus years if you live that long.

[@katman8714]

Take the lump sum, tomorrow isn't guaranteed 😮

[@larriveeman]

I have a fed pension with COLA

[@MikeNapoli1989]

I have a municipal pension. It’s great

[@tessncali5422]

How do you compute accounting for taxes? Meaning, do you use the lump sum amount computation with and AFTER TAX amount? Or before? Thank you!

[@charliehargrave7458]

Lump sum always and invest in index mutual funds. after you die you want the money in your pocket not the companies pocket.

[@danasimmons2513]

Heck yeah, I will make sure they line my coffin in dollar bills.

[@Sky1]

Take the monthly and stiff your wife? If I want my wife to get my pension money the monthly payment is much less

[@dantheman6607]

Mine is about $150 a month less

[@RichardRietdijk]

if you die one month into retirement, your heirs either get that lump sum.. or 0.

[@dantheman6607]

Not if you take the pension with survivor benefits

[@danasimmons2513]

Not if you do a 100% joint survivor, then your spouse would get 100% until their death.

[@HungNguyen-se8dn]

Lump sum will face immediately high taxes for the year. Pension will spread the taxes out on nany years. Do what is the best for your particularly situation. 😂🎉

[@danasimmons2513]

You can roll over the lump sum into an IRA and defer the taxes until you take out the money.