Does your employer offer a pension?
If so, you'll want to be familiar with your payout options before it's time to start taking money out - because your choice can have a big impact on your retirement income.
If you participate in a pension (also known as a "defined benefit" plan), you'll receive, upon retirement, a specific amount of money based on your salary history and years of service. But how you take that money is up to you. You have two basic options: You can accept the pension as a series of annuity payments, spread out over your lifetime or a certain number of years, or you can take the money as a lump sum. (Not all pension plans offer the lump-sum option, however.)
Which option is better? There's no one "right" answer for everyone. But before you retire, you should go over some possible arguments for both choices. Here are a few to consider:
Choosing a lump sum
� Can help you avoid effects of inflation - In many cases, annuity payments are not indexed to inflation. Consequently, you're getting paid with dollars that are essentially worth less and less each year, while some costs - such as health care - may be rising at a rate faster than the Consumer Price Index, a common "yardstick" used to measure inflation. But if you take your pension as a lump sum, you're getting all the money in today's dollars.
� Can help you leave more to loved ones - Once you and your spouse die, annuity payments from a pension may stop. However, if you take a lump sum and then reinvest the proceeds into other securities, you may have more assets available to leave to family members.
� Can help you control when you pay taxes - Your annuity payments will be taxable. Your lump sum is also taxable, but if you roll it into an IRA, you'll have more control over when you take funds and pay income taxes, provided you are over 59
Choosing an annuity
� Can give you greater flexibility in managing retirement income - If you choose to accept your defined benefit payments as an annuity, you may be able to structure the payments to match your needs and goals. Your options may include a "straight-life" annuity that provides a monthly payment for your lifetime or a "joint and survivor" annuity that covers your life and that of your spouse. Or, you may be able to choose a "level income" option, which provides you with larger payments before you start receiving Social Security and smaller payments after. Another option may be a "period certain" payout; under this arrangement, you would receive a reduced annuity over your lifetime, but if you were to die during a specified period, such as ten years, monthly payments would be made to your beneficiary for the remainder of the ten-year period.
� Can give you more money over the course of your lifetime - If you live a few decades past your retirement date, you might end up with more money, in total, if you accept an annuity instead of a lump sum.
As you near retirement, consult with your financial advisor and tax professional to determine which option - lump sum or annuity - is right for you. You worked hard for your pension - so make sure it works hard for you.
Mike Seefeldt, AAMS
Edward Jones Investments
9 Ginger Creek Village
Glen Carbon IL 62034
mike.seefeldt@edwardjones.com
618-692-8052
new loan program to provide temporary
financial relief to small businesses suffering immediate financial hardship so
they can keep their doors open and get their cash flow back on track. 
important protection to parties that provide services, labor or materials for construction projects under contract by granting them a right to record a mechanics lien against real property. The Act confers a right to claim a security interest in another's property and to assert a claim against the owner of that property when such parties may not otherwise have a legal basis for doing so.
