The choice between taking your pension as a lump sum or company annuity can highly impact your retirement. More and more companies are offering a choice between lump sum and company annuity. Before you make your decision, you should carefully consider what is best for your situation.

Lump Sum

The lump sum allows you to take your pension’s full dollar amount out all at once. This is a useful option for someone who is familiar with investing. This leaves you the ability to manage your own funds and have full control over where you invest. You may possibly be able to see a return. The lump sum also allows you to spend how much you want, when you want and leave money behind to family.

Retirement may not be the best time to risk money in investments. There is less time to generate money back if the amount takes a loss. There are no guarantees the market will generate large, if any, returns during retirement. Also, taking the lump sum can make some feel very anxious about spending money because they don’t want to spend all of it too quickly.

Company Annuity

This method provides a payout each month for the rest of your life. This can help end the fear of spending all your money at once. Company annuities lessen the need for time spent on investment responsibilities as well.

Most annuities don’t factor in inflation. Your payout in ten years will be the same as it is now but could possibly not have the purchasing power it once did. Also, if your employer distributing the pension goes under or mis-manages them, it can affect your payout. Company annuities can not be passed on to other people. If leaving money behind to family is important to you, this may not be the best option.

This decision may not be an easy one but there are certain aspects and questions that can help you decide. Think about your family and/or spouse, do you want to leave behind money for them? What is your estimated life expectancy, is there enough time to get a full return with the company annuity? Are you able and willing to manage a large sum of money or just want to take it in small doses? Is your employer’s future stable?

The decision between taking company annuity or the lump sum is extremely important to your retirement. Think about how the options will fit into your life. At Miramontes Capital, we’ve assisted over 1,000 employees in the Orange County/L.A. areas in making this personal

decision. Our financial architects are ready to aid you in this process. We can help you crunch the numbers and answer any questions you may have.



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In this book you’ll find valuable information on: – Adjusting to retirement on a personal level
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– Pensions, IRAs, and 401(k)s

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Interested in more information? We’ve created a free workshop where you can come in and meet us, spend time getting to know our team, and get all of your retirement questions answered. There are only 20 seats available for each workshop, and they fill up fast! Once they’re full, you will have to wait until the next one, so reserve your spot now by clicking here.

You should leave this workshop feeling confident in what your next steps should be, whether you’re 2 years away from retiring or 6 months.

This is your chance to get your questions answered – once and for all!

Miramontes Capital is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Miramontes Capital and its representatives are properly licensed or exempt from licensure. This blog is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Miramontes Capital unless a client service agreement is in place.