Rushville Republican

Business

August 1, 2012

Should you take a pension buyout?

RUSHVILLE — Have you recently received a pension buyout offer? If so, you need to decide if you should take the buyout, which could provide you with a potentially large lump sum, or continue accepting your regular pension payments for the rest of your life. It's a big decision.

Clearly, there's no "one size fits all" answer Ñ your choice needs to be based on your individual circumstances. So, as you weigh your options, you'll need to consider a variety of key issues, including the following:

Estate considerations Ñ Your pension payments generally end when you and/or your spouse dies, which means your children will get none of the money. But if you were to roll the lump sum into an Individual Retirement Account (IRA), and you don't exhaust it in your lifetime, you could still have something to leave to your family members.

Taxes Ñ If you take the lump sum and roll the funds into your IRA, you control how much you'll be taxed and when, based on the amounts you choose to withdraw and the date you begin taking withdrawals. (Keep in mind, though, that you must start taking a designated minimum amount of withdrawals from a traditional IRA when you reach age 70å1Ú2. Withdrawals taken before age 59å1Ú2 are subject to taxes and penalties.) But if you take a pension, you may have less control over your income taxes, which will be based on your monthly payments.

Inflation Ñ You could easily spend two or three decades in retirement Ñ and during that time, inflation can really add up. To cite just one example, the average cost of a new car was $7,983 in 1982; 30 years later, that figure is $30,748, according to TrueCar.com. If your pension checks aren't indexed for inflation, they will lose purchasing power over time. If you rolled over your lump sum into an IRA, however, you could put the money into investments offering growth potential, keeping in mind, of course, that there are no guarantees.

Cash flow Ñ If you're already receiving a monthly pension, and you're spending every dollar you receive just to meet your living expenses, you may be better off by keeping your pension payments intact. If you took the lump sum and converted it into an IRA, you can withdraw whatever amount you want (as long as you meet the required minimum distributions), but you'll have to avoid withdrawing so much that you'll eventually run out of money.

Confidence in future pension payments Ñ From time to time, companies are forced to reduce their pension obligations due to unforeseen circumstances. You may want to take this into account as you decide whether to continue taking your monthly pension payments, but it's an issue over which you have no control. On the other hand, once your lump sum is in an IRA, you have control over both the quality and diversification of your investment dollars. However, the trade-off is that investing is subject to various risks, including loss of principal.

Before selecting either the lump sum or the monthly pension payments, weigh all the factors carefully to make sure your decision fits into your overall financial strategy. With a choice of this importance, you will probably want to consult with your financial and tax advisors. Ultimately, you may find that this type of offer presents you with a great opportunity Ñ so take the time to consider your options.

1
Text Only
Business
  • U.S. jobless aid applications fell WASHINGTON (AP) - Fewer people sought U.S. unemployment benefits last week, as jobless claims remain at relatively low levels that point toward stronger economic growth.Weekly applications for unemployment aid fell 14,000 to a seasonally adjusted 289

    August 8, 2014

  • Choose carefully when remodeling to boost home value With summer in full swing, home remodeling is top of mind for many homeowners. And by all the evidence, the return on home improvement investments has never been better. For most people, a home is their biggest investment. A home remodeling or replac

    August 8, 2014

  • bus-rv080114-citizens pic Citizens State Bank expands local team Citizens State Bank has announced Samantha Coon as a new teller who will serve the Rush County market. She will be working at our Rushville branch located at 1802 N. Main St., Rushville. She brings a tremendous amount of team building and customer se

    August 1, 2014 1 Photo

  • Edward Jones Moves Up on the FORTUNE 500 List RUSHVILLE - Financial services firm Edward Jones moves up on the annual FORTUNE 500 list, as published by FORTUNE magazine, in its second appearance in two years, according to the following Rushville area Edward Jones financial advisors: * Brian D Hu

    June 13, 2014

  • bus-rv061314-fussner release pic Fussner completes 2nd year at Institute for Organization Management WASHINGTON, D.C.-- Institute for Organization Management, the professional development program of the U.S. Chamber of Commerce Foundation, is pleased to announce that Sandy Fussner, Executive Director of the Rush County Chamber of Commerce, has recen

    June 13, 2014 1 Photo

  • U.S. businesses boost April stockpiles 0.6 percent WASHINGTON (AP) -- U.S. businesses increased their stockpiles in April by the largest amount in six months, signaling business optimism that future demand will keep rising. Business inventories rose 0.6 percent after a 0.4 percent March gain, the Com

    June 13, 2014

  • Farm Credit schedules ribbon cutting RUSHVILLE - Farm Credit Mid-America, an agriculture lending cooperative serving farmers, rural residents and agribusinesses throughout Indiana, Ohio, Kentucky and Tennessee, will hold a ribbon cutting ceremony on May 29 for their new office in Rushvi

    May 16, 2014

  • Purdue NExT online learning program launches global website, now open to individuals, businesses, industry WEST LAFAYETTE -- Purdue NExT, an online interactive learning program, has launched its global website, offering 25 new classes. Purdue NExT is an outgrowth of PurdueHUB-U, an online education initiative announced in 2012. It is based on HUBzero, a p

    April 25, 2014

  • Student business competition announces finalists, Demo Day presentations WEST LAFAYETTE - Three Purdue University student-based startups have advanced to the final round of the Boiler Mini-Accelerator Competition or "Boiler," where they will compete for nearly $10,000 in funding. The Boiler, a student-run business competi

    March 28, 2014

  • Congressman Messer honors training program Congressman Luke Messer has made it a matter of Congressional Record that he strongly supports the Manufacturing Matters fast track training program in Rush, Wayne, and Fayette counties. In the Congressional Record dated Feb. 25, 2014, he congratulat

    March 14, 2014

Featured Ads
AP Video
US: We Do Not Pay Ransom to Terrorists Ferguson Teachers Training to Deal With Trauma Jon Hamm on the Unrest in Ferguson Tit for Tat? McDonald's Shuttered in Moscow Life on the Professional Video Game Circuit TX Gov Perry in Washington: 'Confident' in Case Hospital Releases Two Missionaries Who Had Ebola Ramen Health Risks: The Dark Side of the Noodle NYC Doctor-in-chief Seeks Community Approach Indonesian Police Fire Tear Gas at Protesters Raw: Shots Fired in Liberian Shantytown DOJ, Bank of America Reach Record Settlement Raw: Cubavision Airs Images of Fidel Castro Raw: Grief After Deadly Airstrikes in Gaza Officer Who Pointed Gun at Protesters Suspended Kathy Griffin Challenges Minaj to 'a Booty Off' Johnson: Six Arrests, No Tear Gas in Ferguson Raw: Rescue, Relief Efforts at Japan Landslide Cadavers, a Teen, and a Medical School Dream California Drought Stings Honeybees, Beekeepers
Hyperlocal Search
Premier Guide
Find a business

Walking Fingers
Maps, Menus, Store hours, Coupons, and more...
Premier Guide
Parade
Magazine

Click HERE to read all your Parade favorites including Hollywood Wire, Celebrity interviews and photo galleries, Food recipes and cooking tips, Games and lots more.