When you are evaluating your finances and deciding whether to take a lump sum or annuity, it’s important to have all the facts. Whether you are a newbie or quite familiar with the options, you’ll find trusted and valuable information on LumpSumAnnuity.org.
Looking at Annuities:
This option provides you with regularly scheduled payments that will last for the rest of your life. If you’re married, this provides a safe option since your employer will make payments as long as you or your spouse are alive.
Annuity Pros: The advantage to the annuity option is, of course, the stability factor, and being certain of your budget. Opting for annuity allows you to plan your finances, vacations, bills, etc. without worrying about the ups and downs of the financial market.
That reliability of an annuity is a not only ideal for financial reasons but for emotional and peace of mind as well. As retirees, it is comforting to know that your finances are in order, and that income will remain stable throughout the remainder of your life.
Research has proven that retirees who have reliable pensions tend to be happier than those who do not.
Annuity Cons: Everything has it’s shortcomings, and annuities are no different. As enticing as a guaranteed pension may sound, it does have its shortcomings. Annuity payments, unlike Social Security, do not increase with inflation, and there is the possibility that budgets might become extremely tight over the years.
Another possible con to annuity is the fact that a stable monthly payment may not help much if you suddenly find yourself in need of a particular sum of cash to meet a financial need. One unexpected medical bill or home repair can throw your financial situation into the red if you are not prepared.
Pension payments are often spoken of as being a guaranteed payment, although actually they often are not. When you place your trust in a pension, you are counting on your company to make these payments year after year. All too often, companies that were once healthy have been known to fall into difficulty, causing them to renege on the promised pension plans. If this happens, the Pension Benefit Guaranty Corporation is supposed to step in, but with limitations that may still leave you without the income you once expected.
Lump Sum Pros: Taking the lump sum allows you have more control over your pension. With a lump sum, you decide how much income to draw for yourself each month. If an unexpected bill should come up, you can easily dip into your lump sum at any time. If you are a responsible, budget minded individual, this can be a perfect option.
Lump Sum Cons: Flexibility also has it’s possible downfall. With more available funds to manage, it can be easy to dip into the lump sum repeatedly without realizing that you have set yourself on a dangerous path. With a lump sum, once the money is gone, it’s gone.
With these being just two of the immediate options, you can see why it is important to wisely educate yourself on lump sum and annuities. Meeting with a financial planner to decide on possible investment options is always smart.
We at LumpSumAnnuity.org are here to provide you with reliable information for a financially successful future. Please contact us through our comments section with specific questions you may have and check back often for the latest information.