Pension Options: Monthly Annuity or Lump Sum?

While the days of big, plump retirement pensions are dwindling, I still have regular conversations with individuals who have pensions through their workplace. This is a tremendous benefit generally providing a guaranteed stream of monthly payments (an annuity), and may include payments for a spouse or beneficiary.

But in some cases, receiving an annuity payment may not be the best option. In this article I’d like to explore the pros and cons of annuitizing your pension, versus another option that’s typically available as well: the lump-sum payment.

My Brush With Death

On a warm summer morning in June 2009, I awoke to a slight ache in my right kidney. This didn’t alarm me too much. I had felt kidney aches before, and this just seemed like another small episode, easily resolved with my usual remedies. Besides, I was a first year MBA student and had earned a great internship. It was time to work and impress!