148 - Annuity vs Lump Sum - Which Pension Option Should I Select?

Scott and James discuss which pension option they should select, annuity or lump sum? Listener Question Hey guys! Thank you so much for the amazing podcast! I have a pension question. I am a teacher, and I am eligible to retire and begin taking my pension payments in July 2023. I have heard some people say to take the lump sum distribution, and create your own pension/annuity, but the math doesn't seem to work out right for me. I will be 51 at that point, and likely moving to a different profession with an income to add to the pension payouts. The amount that I would receive as a lump sum would be approximately $210,000. That represents all of my contributions over the 28 years I have been teaching plus 4% interest per year. It does not include the contributions from my employer, as I am not entitled to take them if I elect for the lump sum. The pension option that I would choose is the reduced amount that would continue for my wife after my death. It is $3408 monthly, which comes to nearly $41,000 per year. There is no way that I could expect to earn that much on the lump sum of $210,000 to make that a logical choice, is there? Am I doing something wrong on the math? Planning Points Discussed Utilizing Time Efficiently Capital Appreciation Purchasing Power Other issues (IRAs, Inflation, Financial Goals, etc.) Timestamps: 3:54 - Pension Overview 6:37 - How to Determine the Best Choice 9:35 - Inflation Protection 11:46 - Importance of Your Situation 13:51 - Aligning Your Financial Goals  LET'S CONNECT! James Facebook LinkedIn Website Scott Facebook Twitter Website ENJOY THE SHOW? Don’t miss an episode, subscribe via iTunes, Stitcher, Spotify, or Google Play. Leave us a review on iTunes. Have a money question you want us to answer? Submit one here