Dan Celia

Financial Issues

January-February 2019 – Q: I’m 62 years old and have been offered early retirement. Should I take the lump sum offer?

A: In taking the lump sum offer, consider the following. At age 62, you need to be concerned that you could easily live 30 more years. You should also look at the monthly income you would receive if you did not take it.

If the monthly income is more than 7% of the lump sum on an annual basis, then you should take the pension. If it is less than that, it would probably be a good idea to take the lump sum payment. You could then roll it into an IRA along with your 401K and develop a good investment strategy to produce income. 

I would recommend only that you develop an investment portfolio, not an insurance-type product. I would also recommend that you pay the taxes on it immediately and invest the remainder in a charitable gift annuity to create a little permanent income.

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Dan Celia has been in financial management for more than 30 years. He works closely with AFA Foundation and can be heard six days a week on AFR Talk (afr.net).

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