Transfer pension lump sum to IRA?

by Joy

I have a small pension from a company I worked for about 10 years ago, in Colorado. I am age 58 and not working, however my husband is. They are offering me a lump sum. My question is would it be best to keep the pension money in the pension until my retirement age, or transfer the pension money to an IRA? I currently have a 401k, but not a IRA.

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Be Careful Joy...
by: Wendy

The newest issue of AARP has an article about pension plans selling out... go to your library to read it, if you don't have it.

My question (and the reason you should read the article), you say they are "offering" a lump sum. Does that mean you have a choice?

Consider this, you are age 58, and let's say you live to age 88 (or beyond as you are in great health)... that's 30 years.

IF you have the choice of a small pension for 30 years -- 12 monthly payments a year X 30 years... do the math. What's the total you'd receive over your lifetime. Yes, you could pass away earlier, but you might live too! My parents have both drawn a pension for 25 and 30 years... it happens lots.

Look at the lump sum amount compared to the 30 year amount. Consider that the lump sum will earn interest -- but:

(1) will you use it for an emergency or fun and then its GONE?

(2) will you invest it somewhere so you get a good return, but the market goes down and you suffer the loss?

(3) My former employer offered health care insurances with a pension. does yours? Many don't any more, but if yours does... even with a small pension you would lock in health care which totally increases the total value of that lifetime pension

Not saying the Lump Sum isn't right for your life circumstances == just think twice.

Just used GOOGLE, this might be the article I was talking about: THE GREAT PENSION SELL OFF!

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