Lump Sum Versus Monthly Payments
When considering options for adding financial security to your life, lump sum versus payments may come up. While lump sum versus payments may not always be your best bet, remember that in some cases the extra money you receive from an annuity can supplement your regular pension. One of the biggest advantages of lump sum versus payments is it gives you instant, long-term income. You do not have to wait until the next month to begin receiving money. Instead, as soon as you become vested, your money starts coming in immediately.
The decision between lump sum versus payments should really only be made after you’ve weighed the pros and cons of each. There are advantages and disadvantages to each plan. For instance, if your retirement age is early, you may want to consider a pension plan to supplement your income in case you unexpectedly lose your job or remain unemployed for a long time. A pension plan will provide you with security even in the event of layoffs or absences, as it will always be there when you need it.
If your retirement age is late, you probably don’t have enough saved for your retirement. If this is the case, you’ll either need to get a large lump sum payment, or withdraw some of your money early and invest it somewhere. Withdrawals can be costly, but some retirees choose to pay off their entire pensions, which is a good idea if you can manage without it. However, you could end up paying taxes on withdrawals, which is something to consider as well. With a lump sum versus payments, the former gives you more immediate security, while the latter usually leaves you unsure of exactly how your money is going to be used.
In most cases, older people tend to be less confident in their abilities to survive on a monthly basis. They don’t have the extra income to live on, and often fear losing their homes and losing their cars. For this reason, lump sum retirement plans are a great way for them to ensure their financial security during their golden years. Unfortunately, with pension payments, you typically only receive small increments, which can be disappointing for people who want a larger sum of money upon retirement.
When comparing lump sum versus payments, it’s important to remember that different insurance plans offer different features and benefits. A flexible, level payment retirement plan is probably the best way to go, especially if you have a large lump sum. With workers’ compensation, you’re stuck making whatever amount the insurance company sets for you, no matter what accident you might have. It can be a frustrating, non-transparent, and unfair plan, but most workers’ compensation plans do offer some type of safety net.
A plan like this, however, can also mean paying more in taxes because of your increased risk of injury. A more secure, level payment retirement plan is generally a better idea for someone who doesn’t have an ample amount of savings. If you’ve been injured at work, you should consult with a workers’ compensation lawyer to make sure you’re entitled to the maximum workers’ comp benefits. In the long run, a lump sum payment is generally the better option for you when comparing lump sum versus monthly payments.