Skip to main content
No. of Recommendations: 3
"For example $25K *4% = $1K pension."
----------------------------

I had to choose between a lump sum and a pension in 2018, chose the pension.
Since 2018, stock market has had issues in December 2018, and of course 2020.
Fully expect more big time volatility in the future, as well.
Was really nice having a pension paycheck coming in, and because of it
was able to get aggressive in the stock market during both of those events noted above.

I did that very simple calculation you mentioned above, and that sold me on the pension.
( Lump Sum Amount * 4% ) = Annual Payout, and just compared that to the Annual pension.
Yes, inflation will make the pension less valuable over time, but Social Security will
pick up that slack. And yes, the lump sum could have been invested.

Basically, did not want to have most everything tied up in the stock market.
If the pension fund goes under, the PBGC will cover it. If the PBGC goes under,
then eventually Social Security will replace it. If SS goes under, we all are
going to have really big problems, and the 401k/IRA's probably won't be worth much
of anything, either.

I think I've read that you have a good sized 401k/IRA, so getting a pension can allow
you to invest more steadfastly, and more aggressively, if you want.

Either way, good options to have !
Print the post  

Announcements

The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.