Are you eligible for a traditional pension? It’s probably a good idea to keep it to yourself. Retirees whose portfolios have been battered by the bear market would dearly love to get a monthly check for the rest of their lives.
But many employers that provide defined-benefit pensions offer employees the ability to take their pension as a lump sum instead of an annuity. Employers like this option because it gets the pension liability off their books, and some retirees prefer the flexibility a lump sum provides.
If you’re considering taking a lump sum and there’s an offer on the table, you may need to act before yearend to get the most out of your nest egg. Lump sums are typically calculated based on the present value of guaranteed monthly payments, using mortality tables and interest rates published by the IRS. Under the formula pension plans use, the lower the interest rates, the higher the lumpsum payout.
This story is from the December 2022 edition of Kiplinger's Personal Finance.
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This story is from the December 2022 edition of Kiplinger's Personal Finance.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
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