Are Pensions Good or Bad?

Shawn Plummer

CEO, The Annuity Expert

Pros of Pensions

  1. Guaranteed Income: Pensions provide a steady income stream in retirement, ensuring financial stability.
  2. Financial Security: Regular payments can help cover living expenses, reducing financial anxiety in retirement.

Cons of Pensions

  1. Irrevocable Payments: Once you start receiving pension payments, the decision is typically irreversible.
  2. Low-Interest Earnings: Pensions often grow at a lower interest rate compared to other investment options.
  3. Lack of Flexibility and Liquidity: Pensions don’t usually allow for lump-sum withdrawals or adjustments in payment amounts.
  4. Limited or No Death Benefit: Many pension plans do not offer a death benefit to beneficiaries.

Alternative: Rolling into an IRA Annuity with GLWB

  • What is GLWB? Guaranteed Lifetime Withdrawal Benefit (GLWB) is an annuity feature ensuring regular withdrawals during retirement.
  • Advantages over Traditional Pensions:
    • Flexibility: Offers the option to adjust withdrawals or lump-sum payouts.
    • Liquidity: Access to funds is typically easier compared to traditional pensions.
    • interest earnings: Potentially higher interest earnings than standard pension plans.
    • Death Benefit: Provides a lump-sum death benefit to beneficiaries.

Comparing The Options

FeatureTraditional PensionIRA Annuity with GLWB
Guaranteed IncomeYesYes
FlexibilityNoYes
LiquidityLimitedHigh
Interest EarningsLowHigher
Death BenefitLimited/NoneYes

Conclusion

While pensions provide guaranteed income, their lack of flexibility, lower interest earnings, and limited death benefits are significant drawbacks. An IRA annuity with a Guaranteed Lifetime Withdrawal Benefit (GLWB) offers a balanced alternative, providing similar security as a pension but with added benefits like flexibility, liquidity, higher interest potential, and a death benefit for beneficiaries.

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Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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