Lifetime Pension Payments
- Fixed pension for as long as you live
- May include indexing for inflation
- No perceived risk, many are guaranteed
- You don’t need to worry about the impact of the markets
- Cannot draw down in an emergency
- Payments stop if you die
- There is no inheritance for your children
Lump Sum Payment
- Pay a lump sum into a registered plan
- You have control over the investments
- You also have control over how much is withdrawn
- Withdraw money for an emergency
- Must take responsibility for managing into retirement
- Must plan for lifetime withdrawals
- Risk of running out of cash before you die
- If you die early, all money left overs goes to your heirs
- May lose sleep at night, do you have enough to last
As you can see there are some big advantages and disadvantages to both. Work with an advisor to assess what your payments would be in both scenarios. Make the right decision for your situation and risk tolerance.