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Taking your pension: Lifetime payments versus lump sum

by | Jun 29, 2018 | Division Of Pensions

You’ve worked at least 25 years in a profession that offers a pension as a retirement plan. You have decided that it’s time to retire. So, what do you do with that pension you’ve been paying into for most of your adult life? Do you take it all in one lump sum or do you opt for the lifetime payments? This can be a very difficult decision to make in Oneida. Let’s take a look at both options so you can make an informed decision.

The only reasons why you should take your pension as a lump sum payment are if you are in poor health, you aren’t expecting to live much longer, you don’t have a spouse who will receive the pension upon your death and you have another nest egg that can provide you with monthly payments, such as the pension of a spouse.

The benefits of taking lifetime payments instead of a lump sum payment include the following:

  • Money is guaranteed with lifetime payments
  • Not responsible for investing the money with lifetime payments
  • Monthly income with lifetime payments is safe if stock market stumbles
  • No investment management fees paid with lifetime payments
  • Can leave leftover money with spouse or adult children if survivor benefit is listed
  • No income tax if taking lifetime payments. Lump sum must be rolled into an IRA to avoid income tax

As you can see, you have more advantages when you take the lifetime payments instead of one lump sum in New York. Make sure you know the ins and outs of your pension so you are covered when the time comes to retire.