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Article: Lump sum or annuity: Which one is better?(Knight Ridder Newspapers)
- Article from:
- Knight Ridder/Tribune News Service
- Article date:
- November 25, 2002
- Author:
CopyrightCOPYRIGHT 2002 Knight-Ridder/Tribune News Service. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Here's a retirement question without a wrong answer: Lump sum or annuity?
Unfortunately, there's not a right answer either.
Nearly all workers covered by a traditional pension plan face this question as employers increasingly offer retiring employees a choice of how to take home those earned benefits.
The traditional choice is an annuity. It pays the pensioner the same amount of money every month for the rest of his life.
The alternative is a lump sum. It's one big check instead of the stream of smaller monthly checks. The idea is that the pensioner invests the big check and provides for his or her own retirement that way.
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