Top the Treasure Hunt leaderboard by 5 p.m. Friday to win a $100 gift card! Learn more



Rock Your Finances $50K Give Away Sweepstakes
Car buying made easy with the AARP Auto Buying Program

Jobs You Might Like




Best Employers for Workers Over 50

See the latest winners of this AARP recognition program.

Employer Resource Center

Attract and retain top talent in a changing workforce.

Big Decisions

Take the Money Now – Or Later?

The pros and cons of waiting for a company pension versus taking a lump sum payment.

Q: I'm nearing retirement and I have the option of taking a company pension or lump sum payment. Which would you take and why? Ron, Texas
A: Ron, there’s not a simple answer. The ramifications of  this decision can be huge, and it is made even more perplexing by the conflicting and often biased advice on the subject.

True, some pension plans make it easy: They don’t give you a choice, requiring you to take an annuity when you retire, period. On the other hand, many plans allow you the option of taking a lump-sum payout.

If you’re one of the majority of workers whose employers don’t offer a traditional pension plan, you still can make the same choice  - managing the funds or annuitizing the funds for any retirement plans that you have contributed to, like 401(k) and 403(b) plans and IRAs, as well as any other, non retirement money that’s lying around.

Consider the following when making the lump sum (manage-it-yourself) vs. annuity decision:

1. Investment risk. If you decide to manage the money yourself (or with the help of an investment advisor), what happens to it is your business. If you lose it through unwise investments  – or even “wise” ones that go sour – there’s no recourse. Unless you are confident of your own investment abilities – or those of a competent advisor – you may be better off taking the annuity.

2. Liability risk.  Money that you are investing on your own is usually not protected from liability. These funds have to be used up to pay major medical (or other) expenses, including nursing home costs, if you exhaust other resources.  In many cases, though, annuities are not subject to this liability. Consider the following scenario:  You control all of your investments, go into a nursing home, spend down most of your resources, leaving a surviving spouse or partner with a much-diminished lifestyle. While hindsight is always 20-20, had any of the money been in an annuity with a joint and survivor provision, the survivor would still be able to receive the annuity income.

Topic Alerts

You can get weekly email alerts on the topics below. Just click “Follow.”

Manage Alerts


Please wait...

progress bar, please wait

Tell Us WhatYou Think

Please leave your comment below.

Jobs You Might Like

Discounts & Benefits

From companies that meet the high standards of service and quality set by AARP.


Members get 15% off eligible products/services and 5% off shipping at The UPS Store®.

AARP Discounts on Consumer Cellular Phones and Plans

Members save 5% on monthly service and usage charges with Consumer Cellular.

Member Benefits

Renew today! Members receive exclusive member benefits & affect social change.

Explore Your Learning Possiblities