Are Pension Buyout Offers Really a Good Deal for You?

Are Pension Buyout Offers Really a Good Deal for You?

In recent years many large employers have offered former employees who are not yet at retirement age the option to take a pension buyout. These offers usually offer several options

  • Take the value of your pension as a lump-sum payment which can be rolled over to an IRA. The advantage is the ability to manage this money   yourself and perhaps allow it to grow to level that would provide a greater benefit than taking your payments on a monthly basis.
  • Take a monthly payout now (earlier than your normal retirement age).
  •  Do nothing and take your original pension payment (or a lump-sum if offered) at your normal retirement age.

Factors to consider:

  • Will taking one of the buyout options put you in a better financial position than doing nothing and waiting until your normal retirement age?
  • Are you comfortable managing a lump-sum or do you have a financial advisor you trust who can help?
  •  Is your financial and/or health situation such that taking the monthly payments now would make sense?

These types of offers are likely to continue due to the increasing costs of administering pension plans and the desire to get the liabilities associated with the pension payments for former employees off the books.

If you receive a pension buyout offer give us a call. We can help you evaluate the offer and make the best choice for your personal situation.

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