Get The Most From Your Pension Lump Sum or Monthly Annuity

Check out Jeremy’s latest podcast on retirement planning by listening on “Apple Podcasts” or “Google Podcasts” or read below for Pension vs. Monthly Annuity.


102 – Do you plan on claiming your pension soon? Make sure you consider all your available options before making the irrevocable decision.

In this episode, Jeremy Keil talks about pensions. More specifically, he explains why it’s important to be aware of all the possibilities when picking a pension plan. Jeremy shares his professional opinion about comparing a one lump sum payment to a monthly annuity and provides resources about pension plans and how you can calculate which one makes more sense for you financially.

Jeremy discusses:

  • The temptations of taking your pension in one lump sum
  • How to decide between a monthly annuity and a lump sum pension plan
  • Why it’s important to read your pension plan summary and consider all the possible options before making a decision
  • Why the better choice between a monthly annuity and a lump sum pension plan varies annually
  • And more

Get the most from your lump sum pension or monthly annuity payment

1) Lump Sum Pension Payout or Monthly Annuity Payments?

When collecting your pension, deciding whether you should take the lump sum amount or a monthly annuity is a controversial discussion. 

For some, having the whole lump sum of the money puts their minds at ease because they know exactly how much money they have and have immediate access to it if and when they need it.

On the other hand, some people don’t trust themselves to not blow through the pile of cash and worry it won’t last them through their retirement if they don’t have a third party monitoring how much they can use at a time, like an allowance.

There are a few things you should consider when it comes to making your decision, including which option gives you the most value, survivorship, whether you can change your mind or if it’s final, and when you should start taking your pension.

In another article, we discuss choosing between a lump-sum payout or monthly annuity pension: Should I take a lump sum payout or monthly annuity from my pension plan? ->The post covers everything you need to know to be able to calculate the values of a lump sum pension, compare it to the monthly annuity amount, and determine which is the better value.

2) Pension Survivorship Options

Survivorship is another factor in determining which pension option gives you better value for your money and meets your needs.

If you have a beneficiary on your pension plan but pass away before claiming your pension or a few years after starting a monthly annuity, will there be anything left for them?

You need to keep in mind the monthly income needs of your surviving spouse, especially since one of your Social Security benefits will go away when the first person dies.

Also, you should look into the pension plan rules to see what survivorship option is automatically started for your spouse, should you die before you start your pension.

3) Your Pension Decision Is Final

The decision is final when you take your pension and whether you take a lump sum or a monthly payment.

We haven’t seen a company or pension from a company that allows recipients to start with a monthly amount and then change their mind and take the rest out in a lump sum. Changing your mind is not a possibility.

Every time we see a pension form, it says it is irrevocable, with a specific time allotment to change your mind – you might be able to change your mind after you sign the form, but be quick! Once you get your first payment you most likely can’t make any changes. Sometimes signing and sending in your form is the final say, with no chance to change your mind.

That’s why it’s essential to do the math and learn the processes and how your pension plan works ahead of time.

It is crucial to consider the pros and cons of both lump sums and monthly annuities before making a final decision.

For example, a lump sum gives you more flexibility to use your money as you want or need to. On the other hand, monthly payments don’t give you the flexibility for how much of your pension you can use at once. Nevertheless, your pension payments will be guaranteed each month for as long as you live, ensuring that you will enjoy a source of income in retirement for the rest of your life.

Be sure to consider your retirement goals and financial needs, and consider your pension’s value before choosing when you want to take your pension and the type of payment plan because once you sign the pension plan, the decision is final.

4) You Don’t Have To Take Your Pension Right Away

Do you feel like the day you retire is the day you take your pension and either take it as a lump summary or a monthly amount?

You don’t have to.

It’s okay, and even recommended, to take some time before taking your pension. Find out what your options are through your pension company and see if there are any options where you might get a better value by waiting.

If you wait for one, two, or even five years, look at the pension amount – both the monthly and the lump sum amounts – and calculate it to figure out what’s the best option for you. You might see that your pension grows at 5%, 7%, or we’ve even seen 16% growth rate year over year! This would be a large incentive to wait on taking your pension.  

Then again, we have seen pension amounts that stay level or even drop should you wait. This would encourage you to take that pension option as soon as possible. That’s why it’s so crucial to look at all your options, ahead of time.

Again, we have a blog post called: Should I take a lump sum payout or monthly annuity from my pension plan? It details how you can calculate your pension amounts and make the decision that’s right for you.


To learn more about the differences between pension and monthly annuity, check out the resources below!

If you have any questions, feel free to contact us using the contact information provided below!


Connect With Jeremy Keil:



Results and figures presented within the above links are hypothetical, unaudited and are intended for illustrative purposes only.


Keil Financial Partners assumes no liability or responsibility for any errors, omissions, or other issues with the links and their respective contents. This includes both the website content and any potential bugs, viruses or other technical threats.

No Tax Advice

Keil Financial Partners does not provide any tax advice. No information or results from the links should be interpreted as tax advice. Please seek guidance from a qualified tax professional for any and all tax-related matters.

No Investment Advice

The content and information provided through the links should not be interpreted as being investment advice or a recommendation of suitability for any particular security, portfolio of securities, transaction, or investment strategy, or related decision. Please seek assistance from a qualified investment professional for any and all investment matters.

Investment Risk

Investments may increase or decrease significantly. All investments are subject to risk of loss.


Listen to Retirement Revealed on:

Ask Jeremy a Question


7 Questions That Could Make or Break Your Retirement

Download our FREE guide today.