Lump Sum Or An Annuity - Which Option Is Most Beneficial For Your Retirement?

There are many options available to us to help us address this concern

, and among these options is to invest money that will grow as we wait for our retirement. Once we retire, we can either receive the return of this investment as a lump sum or an annuity.

However, this leaves us with the question: What is the best option, receiving money as a lump sum or annuity? Both options have their advantages and disadvantages, and it is important that you are aware of them before making your decision.

Get a fixed price

When your investment has matured, you can choose to get your money in a lump sum. This means that all the money you originally invested and the interest with which it grew up during the period of maturation. The beauty of getting a lump sum is that you can do whatever you want with the money and you can redirect money to other investments either.

However, the problem to get your money in a lump sum is that it is all too easy to spend. You can develop the mentality that you have so much money it will not be exhausted, but in reality, if you do not reinvest your money, it will all disappear. You can also lose everything if you do not take wise decisions on how to reinvest your money.

Get a pension

In contrast to your back your investment as a lump sum, annuity means for receiving the benefit of your investment on a monthly or quarterly basis. It is just like having your paycheck at work, except that your paycheck comes from your investments this time, rather than your employer. This is an income you can not use all of a sudden, one you can count on the rest of your life.

But again, the purchase of annuities can be a complicated process. You have to choose among many features to make sure that you are getting an annuity that fits your exact needs. Also, if you have not named any beneficiary of your pension, payments will stop coming when you die, whether or not any money left at the main investment.

Ultimately, the choice between getting paid for your investment in a lump sum or an annuity depends on you. If you have the financial expertise to continue to reinvest your money or you have someone you trust to do it for you, you can go to get your return on investment of retirement as a lump sum payment. But if you want financial security that can provide an annuity, you can opt for instead. In any case, you will have something to rely on support you financially when you reach retirement age.

by: PinkyRoss

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