Most of us will end up facing this dilemma sometime in our life: should we opt for getting monthly pension checks for life or a lump sum payment? 29% of Americans are fortunate enough to have company-funded pension plans. While getting a monthly cheque may seem tempting and a way to moderate how you may end up spending all of your money, you may actually be better off opting for lump sum payments.
What Is a Lump Sum Payment?
A lump sum payment is a one-time payment for the total or partial value of an asset that is taken in lieu of recurring payments that would otherwise be paid out in frequent or irregular intervals. Depending on the type of pension plan that you have, the lump sum payment may be of an equal or smaller sum than the total of the recurring payments. The amount that you get will be dependent on the terms and conditions of your pension.
What Are the Advantages of Opting for Lump Sum Payments?
While you may think that getting monthly cheques may be more beneficial in the sense that you can moderate the amount of money that you are spending and saving, the truth is that lump sum payments offer many lucrative advantages as well. You should consider these advantages and weigh out your pros and cons when making a decision. Some of the advantages of opting for lump sum payments will include:
While lump sum payments are able to offer numerous benefits, managing the money that you have can be rather difficult even for seasoned investors. If you decide to take lump sum payments, you will want to speak with a financial advisor in order to better familiarize with investment options that are available, and where your money should go in order for you to pay the least amount of taxes. With good management, you can make your money work for you and grow your financial portfolio. Click here for more information.Share
27 August 2014
As I see it, one problem with most budgeting programs is that they don't account for the "real life" factor. Anyone can tell you not to spend anything and to save everything, but when it comes to feeding your kids or dealing with a medical emergency, most budgets get thrown out the window. I realized that this was a problem, so I decided to start focusing on budgeting for real life. I decided to forget everything that I knew about budgeting and started working with a clean slate. This blog is all about budgeting for real life and knowing how to spend your money the smart way.