[tophcfa]

Originally Posted by collie1228

This is a math exercise, which should be done by a professional. Some people want to manage their own investments, so the annuity might not be for them. Others have no interest in managing their finances, so a monthly fixed payment may be better. All things being equal, a professional financial analyst can calculate the net present value of an income stream, and show you how much that income stream is worth in a lump sum.

Anyone with basic skills can calculate the NPV of an income stream using an excell spreadsheet. Very easy to do, and the interest rate used to calculate the NPV can be an input to the formula, so all one has to do is change the interest rate input cell to see the NPV at different discount rates.

[DAVES]

Originally Posted by gatorbill1

If you can budget what you withdraw from account, Lump sum is best, then you can invest as you want to, I like mutual funds. If sticking to budget is a problem, an annuity gives you a guaranteed income, but takes a big bite of disbursement with the commission taken by person who sells the annuity.

You do not need to go with an annuity to get a check every, whatever you choose. If you have an account with any of the brokerage places, such as Fidelity, or T. Rowe, all you need do is fill out a form and they will send you a check every xxxxxxx till you run out of money.

Actually that required minimum withdrawal from an IRA is the same as above. The calculation is based on you living to 100.
Whatever you've saved into your IRA will be zero IF, you live to 100.

Budget? As my mother used to say, man plans and god laughs.

All you need to know is when you will die, the rate of inflation till you die, the taxes that will be take from you till you die, and the return on your investments till you die, oh and what will kill you some diseases are far more expensive to die form than others.
Few people can know the answers and fewer still can honestly face the answers.

[pauld315]

It all depends on how much the company will give you in a lump sum vs taking a pension. A conservative way to estimate the value of a pension is to multiply the yearly amount you get by 20.

When I retired I had my financial adviser take a look at the numbers. He told me to take the pension because the lump sum payment they were offering was so pathetic. He told me that in almost all cases he recommends the lump sum but with my case he couldn't go in that direction.

Now, that is an honest adviser because you know he would rather be managing that money and getting his yearly commission than having me taking the pension !

[retiredguy123]

Originally Posted by dewilson58

1cc is giving the best advise.


Clarky is just generalist and % guidelines are not advise.


Your age has a significant impact on the decision.
($1mil lump or $5k/mth at age 60vs92 is significantly different)


Run from TV Talkers for advice.

Clark Howard's 6 percent rule does not only consider the math calculation. He also lists several other factors that you need to consider before deciding which way to go. You can pay a financial advisor to do the math, but in the end, it is really your personal decision to make.