Expert: Allen - 11/30/2007

Question
Hi...
  I am a well-paid professional who can claim full early retirement in 3 yrs from a large medical group that seems to be doing well.  However, my pension will clearly exceed any significant PBGC protection (think airline pilots). Given the long term financial uncertainty of any employer, I am considering taking a 5 yr payout rather than lifetime payout.
  I am comfortable & successful managing my investments and have a well-diversified low cost portfolio. What factors should play into my decision? The plan is reportedly very well funded; what specific info should I be looking at?  If it IS well funded, should that end the discussion?
  Any good articles or texts to make me smarter?  Thanks.  

Answer
I'm assuming the plan is a defined benefit pension plan and that you can choose either a life annuity, a short term annuity or a lump sum payment. If this is the case, I believe the choice comes down to the annuity or the lump sum. The 5 year payout doesn't make sense to me - you would either want an assured monthly payment or a single sum that you can transfer to an IRA and invest for yourself. The choice between these options depends on how well you can do on your investments. If you can earn more than you will receive had you elected an annuity, then it makes sense to elect the lump sum. On the other hand the guaranteed income might be enticing.

I can't suggest any articles or books.