Accounting, Payroll & Pension Issues/Pension Payout

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Expert: - 10/29/2008


Question
I am receiving two pension payouts at age 60 beginning next year. They give me two options: (A) LIFE ANNUITY payment of $753.68 per month for life or (B) 10-YEAR CERTAIN & CONTINUOUS ANNUITY payment of $708.46 per month for life. Which one is best?
Thanks!
Ron

Answer
The life annuity pays you a certain amount each month as long as you live. The 10 year certain annuity pays you a certain amount as long as you live; if you die before 120 payments are made, payments continue to the person you name as your beneficiary until a total of 120 payments have been made to you and your beneficiary.

If you are not married and do not have anyone that you want to provide some income to, it would make sense to choose the larger life annuity. On the other hand if you want to provide a possible income to someone, the 10 year certain option may make sense (but only if you die before you receive 120 payments).

Accounting, Payroll & Pension Issues

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Allen

Expertise

Pension questions ONLY. Pension, profit sharing, and 401(k) plan design, installation, administration and actuarial services; rollovers to Individual Retirement Accounts; taxation of retirement plan distributions

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Over 35years experience in the pension field

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Various actuarial organizations

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MBA and various professional certifications

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