What's the best way to take a pension?
Monthly checks? Lump sum?
Answers
116 points
eliseom answered one year ago …
Depends. Check credit rating of holder of funds. If not satisfied take the lump sum and invest in Money Market Fund until after elections, time when Fed will have to raise interest rates as much as by a factor of two within a year; then invest in U.S. government bonds. But if it's a lot of money, do a Google search for a bank out in the West coast that has C.D.'s tied to the price of gold, principal guaranteed to 100,000. I think Evergreen is the name but I'm not sure.
Read more from eliseom2775 points
Oldman answered one year ago …
eliseom has the idea of the electronic (and respectable) bank, but it's
http://www.everbank.com
- and some of their CD's are FDIC insured and available in various currencies and currency pools.
But ... before you begin taking a pension...be aware that this is irrevocable. You can't stop it and pay back (as you can with Social Security) to get a higher payout at a later age. So if you can be employed, after beginning a pension payout, be sure to reinvest the post-tax proceeds in something that will grow while your income needs are partially or fully satisfied by other income. I did this, because I had an - age 55 limit- pension payout from a former state employer...and I continued to work ( at a totally different employer) until I was 62.
If you are married and want the maximum (single-life payout) pension, you will need to get a notarized waiver from your spouse. Otherwise, the default is a 50% survivor option, with a small decrease in monthly payments,; or a 2/3 or 3/4 or "full" benefit to survivor payment (with sequentiall smaller payments to you, but larger ones to your surviving spouse)
You also need to get a gross estimate of your and spouse' life spans (expectations), which is mostly determined by blood relatives health histories and age s at death.
You need to check with the Human Resources staff at your employer...they are bound by several Federal Laws.
Lump sums, unless the total is really small, are seldom the best way, because the pension insurers have much better investment expertise than you do...and the pension benefits, for commercial firms, have some minimum Federal guaranty that PDQ company -which went bankrupt- will still have some payments to its pensioners.
