SGH Wealth Management: What I'm Reading

The Pension Decision: Which wire to cut?

SGH Wealth Management


You have come to that fork in the road with what could be one of your biggest assets in retirement, your company pension and there are no takebacks. Not to mention, there are many unscrupulous advisors out there that may recommend the Lump Sum Distribution option only because it will lead to more in commissions. Keep in mind that when working with CFA® charterholders, we are bound by the highest ethical standards, the CFA Institute Code of Ethics and Standards of Professional Conduct.

3 Things that might you not be thinking about when Deciding on your Pension?

  • Life Expectancy
    • Although commonly overlooked, how long you live may be the largest consideration in making this decision. As the average lifespan rises, more Americans find themselves facing the risk of outliving their retirement savings which could be mitigated with your personal best decision on your pension.
  • Estate Planning
    • There are often survivorship options for a spouse but less options to pass this accumulated wealth to children or non-spouse persons. Many plans are designed such that if the unexpected were to happen just days after starting pension payments, that your family may not get the value from this valuable asset of yours.
  • Company Solvency
    • Pension plans can be complex and in recent years, many have had serious concerns about their financial solvency. An easy way to check on a private plan’s financial health is to read the annual funding notice and assess their: Current Funding Ratio, Plans for making up possible shortfalls & the % of plan assets exposed to stock market volatility.