Pension policies can vary with different organizations. Because important pension-related decisions made before retirement cannot be reversed, employees may need to consider them carefully. This calculation compares a lump sum with a monthly pension.
The lump sum would pay the same income for 15 years and 2 months, until about age 80.
| Lump sum lasts | 15 years and 2 months |
| Pension paid from lump sum | $1,174,494.34 |
| Starting monthly pension | $5,000.00 |
If the lump sum, invested at your expected return, can pay the same rising income for longer than you expect to live, the lump sum may be the better deal. Otherwise the monthly pension gives more lifetime income.
Monthly pensions also protect against living longer than expected and market losses, which this simple comparison does not price in.