Should You Take Your Pension as a Lump Sum?
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This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
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This decision is crucial for your retirement finances. Here's what you should consider:
- Maximize flexibility: A lump sum can be tailored to your specific needs, offering potentially higher returns and leaving a legacy for loved ones
- Optimize for taxes: Lump sums open up opportunities for strategic tax planning, potentially reducing your tax burden throughout retirement
- Compare income guarantees: If lifetime income is your top priority, compare a monthly pension payout to other options like annuities
Why It Matters: Your pension choice can significantly impact your retirement lifestyle. Understanding the pros and cons of each option empowers you to make the decision that best suits your individual needs and aspirations.