Choosing between lump sum and payments is a difficult decision for most people. This comes down to your immediate and long-term financial goals. Do you want a lump sum payment to go towards your retirement, or are you looking to put some money away into a pension for the future? Annuities and pensions come with their own benefits and pitfalls. If you’re on a tight fixed budget, you may not want to start a pension or annuity program right now. However, if you have a plan that could lead to a comfortable nest egg in the future, it would be silly not to take advantage of the future security of these types of plans.
The best thing you can do is compare lump sum versus payments when deciding which option to go with. A quick search online will show you all the different pension plans available to you. Some are better designed for immediate needs, and others provide long-term stability with great benefits. You’ll need to look at the advantages and disadvantages of each type of plan to decide if you’d like to invest your future pension in one of them.
One thing you should consider when comparing lump sum versus payments is how long until you will actually receive your pension payments. With an annuity you may get the money you have invested sooner, but it may still be a while before you actually get your payments. A pension payment will usually be made quite a few years in the future, so this can be a big difference. If you are looking forward to making your payments, a plan that provides immediate security is the way to go. There will also be less hassle in the beginning to adjust to life on a pension.
When you compare lump sum versus payments, you should also consider the pros and cons of a workers’ compensation insurance plan. Unlike annuities and pensions, workers’ compensation plans do not need to be paid for as long as you work with a company. Once you stop working with the company, however, you must begin paying into your workers’ comp program. This can take several months or even a year or more, depending on the severity of your injuries. While it’s nice to know you don’t have to pay anymore for your injury, some people don’t like this idea. They feel they are entitled to their benefits the minute they become ill.
There are some advantages to lump sum over the years, especially when you are younger and have little income. You can set up a monthly payment amount that won’t go up as you age. Some plans allow you to defer your payments if you’re laid off from your job, and these can give you some financial relief. Most workers’ comp plans will allow you to choose payment options you’re comfortable with over the years.
For many people, a lump sum is all they need to get the security of a decent life. It’s true that your future pension income may be low when you’re young, but this is completely negotiable. You can always sell the lump sum you receive and use it to purchase a pension in the future. Just make sure you’re still able to get the same benefits you would’ve received had you continued to work well into your golden years.