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"Your Retirement Choices:" A Guide to Making Decisions Regarding Your Pension Benefits

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"Your Retirement Choices:" A Guide to Making Decisions Regarding Your Pension Benefits

One of the most important letters you may receive is a letter titled “Your Retirement Choices.”   This cheery title sits atop a letter that companies send when it’s time for you to make a decision regarding your accrued pension benefits and is usually sent close to your expected retirement date – although sometimes there is an opportunity to claim benefits early.

Choosing the right pension benefit is complex given the number of considerations.  There are single life annuities. Qualified joint and survivor annuities.  Maybe you take a lump sum distribution. What does period certain mean? Will your monthly payouts adjust for inflation over time? For many people their pension benefit is a significant portion of their post-retirement income and so it is critical to make an educated decision that will be best for both long-term financial needs, as well as peace of mind.

Attached here is an article from the AICPA that goes into significant detail on pension benefit provisions and factors that may affect your decision.  It’s important to note that there is no one right choice.  There are pros and cons to each decision – and which one is right for you will depend on your unique personal circumstances. Your plan sponsor is legally required to provide you basic information to help make your decisions, but some of the nuances of the decision may not be obvious and may be buried in the fine print.   This emphasizes the benefit to engaging a professional to help review this decision, like DHG Wealth Advisors, who can review the fine print and help you talk to your plan sponsor in more detail.   We’d welcome a conversation to help review this important decision with you.

The content in this article is for informational purposes only and does not constitute investment advice or an offer to buy or sell any security. The information in this article is believed to be accurate as of the time it is distributed and may become inaccurate or outdated with the passage of time. You should contact your financial advisor or CPA professional before making any tax or investment-related decision.   Past performance does not guarantee future results.  All investments may lose money.