Take Pension as Annunity or Lump Sum Payout?

[disneysteve]

No COLA.

With no COLA, I would absolutely go for the lump sum and invest it myself.

[sblatner]

How old are they?

[MooseBucks]

He ended up going with the 100/100. I guess at retirement age a bird in the hand is worth two in the bush.

[~bs]

now he just has to hope he lives another good 20 years.

If they're really worried about the spouse after he passes away, put that 23% difference between the two option in an investment account.

[MooseBucks]

now he just has to hope he lives another good 20 years.

If they're really worried about the spouse after he passes away, put that 23% difference between the two option in an investment account.

That only works if he isn't hit by a bus, gets cancer etc....The security of knowing they get the money every month was worth more than the risk.

[~bs]

That only works if he isn't hit by a bus, gets cancer etc....The security of knowing they get the money every month was worth more than the risk.

well, that's the decision that we all make in investing all the time. Do you put all your money under the mattress or in "safe" CDs because you will be secure in knowing the money will be there? Or do you invest in stocks and riskier options?

Or in this case, do you take the smaller amount until the spouse with the greater lifetime dies or do you take a 23% higher amount, with the ability to invest the difference NOW? 23% difference plus investment gains, year in and year out is a HUGE difference. The pensioner would have to die well before the spouse for it not to make financial sense, especially due to the time value of money, and the fact that the spousal payments will start possibly decades into the future, and there's no COLA adjustment to help compensate.