Pensions are great things! Generally, a person has a variety of options to choose from for providing lifetime income, not only for themselves, but possibly for their spouse as well. However choosing the option that is best for you deserves deep consideration.
Are you single? Then the “Life Only” (aka Option 1, or Single Life) might work great, However, if you’re single and have little cash liquidity, you might want to consider a Lump Sum distribution to a rollover IRA to potentially have access to cash in the future.
How’s your health? If longevity runs in your family, and your annual physicals turn out happy, that’s another check for a lifetime payout. But what if you’re married? Taking less monthly income could protect your spouse if you predecease them, however in many cases you cannot reverse the decision if they die before you. That scenario is very realistic, and one that can leave a pensioner with a lower monthly lifetime income.
Some pensions solve that problem with a “pop up” provision, but there is still a cost. The bottom line is this: Your financial planning team at SDP can help do the math with you to determine which option truly suits your needs the best.