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Pension vs lump sum Does anyone have a good online tool that illustrates the differences in easy to read analysis to present to clients? Thanks!

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The bigger question in my opinion is whether you trust the pension fund to maintain solvency as well as being okay with losing the value if you and spouse pass away. With lump sum you are in control of the asset. Just a thought.

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Wow. That’s an unforeseen risk for sure. My dad had something similar after 36 years of service with a company. It’s heart breaking.

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I literally just assume age 90 (pending all things considered) and add the total of fixed income checks. Then I take the lump sum amount and (again pending client risk) take it compounded by 6%. I do 3% if they wish to also have me send fixed amounts while also keeping the hopeful principal invested. I’ve personally found for my clients and business lump sum is usually the better option. Many unguided clients choose life only or 50/50. When you could take a conservative investment approach and pass down wealth more effectively.

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Do’t know online tool. But simply you can just calculate FV base on today ‘s total investment with assumptions return and compare how much they can withdraw in pension with same ending age

This is pretty much what I do to illustrate the dollars and cents of it and then have a good conversation with the client that there may not be a wrong answer. There is a right answer for them. Is leaving money to heirs important, are they risk averse, do they have enough in assets with the lump sum that there is no chance of them running out of money so that word guarantee isn’t buying them anything, is there a gap in ages between spouses... There are so many variables, no tool is going to be able to say this is the right answer for this person. The answer might not be in the dollars and cents of only the pension, it’s going to be found in putting all of the puzzle pieces together as one picture.

likeuplifting

I have a spreadsheet that shows that well and can share if you’re interested.

I would appreciate your spreadsheet also if willing to share. Cfn5694@yahoo.com. Thank you!

Yes it’s called Excel

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