Will a Lump Sum Make Your Life Easier?
Deciding between lump sum versus payments for your retirement benefits depends on your goals for your future. While lump sum versus payments may not always be your most effective option, remember that sometimes the extra money you receive from a life insurance policy will supplement your regular pension. Before you make a decision, it’s important to understand what you stand to benefit from it and in turn, have a strategy in place. Listed below are several examples of when a lump sum is a better choice over payments. When you’re ready, you’ll have no trouble finding a company that offers this type of investment.
Say you’re planning to buy a home. Your future pension payments may not be enough to purchase your home. If you’ve saved enough for a down payment and you are offered a mortgage, then lump sum payments may be your only option. This type of investment will ensure you have extra cash to help you make your home purchase, leaving you with the stability and security of a solid pension that can help you achieve your financial goals.
Another example of when lump sum versus payments are more practical comes in the form of a life insurance annuity. The goal of these policies is to offer a steady stream of income during retirement, allowing you to maintain the lifestyle you’ve been living for years while paying a little bit for expenses. With most of these policies, your monthly payments will be lower than they would be if you took out a pension. However, since you are receiving fixed payments, you can be sure to make these payments every month, providing you the stability you need to enjoy your lifestyle after retirement.
When lump sum versus payments are the best option for your retirements, it’s important to understand how much you’ll need. You must remember that your pension won’t be enough to cover all of your daily expenses. You may also need to save for a house and/or vehicle. If you don’t have a stable source of income, it’s possible that you could hit a financial snag, which would leave you without the money you need to live the lifestyle you’ve come to love. An annuity typically offers more security than pension payments, as they are not expected to increase in value.
When lump sum versus payments are compared, it’s important to take the time to find out what a policy’s terms and conditions are. Some policies are designed to offer a lower monthly payment, but the terms are such that the payments do not begin until a specific amount of money has accumulated. Other lump sum payment policies simply allow you to get your payments directly deposited into a designated savings account. Knowing the terms of your chosen policy will give you the assurance you need that your money is available to you when you need it most. If you know your choices, you can go with the plan that provides you the best security.
The terms of a particular plan can vary depending on the size of your initial deposit, your age, whether you retired before Jan. 1, and other factors. It’s important to review all aspects of the contract before you sign on the dotted line. This includes understanding the terms of the cost-of-living increase, and the potential benefit of pension rollover. While a lump sum payment may seem like the only option for some people, a well-designed plan can provide you with more security by offering you better monthly payments and more potential for additional benefits down the road. Take the time to learn more about the options available to you, and you can make an informed decision that will benefit you now and in the future.