| People sorting out their pensions will be considering | | | | company you work for, it is a good idea to |
| various options which include the payout plan. | | | | discuss the options with the HR department or |
| What would be the best option, a pension lump | | | | personnel. If it is a pension lump sum you have |
| sum or a long term pension plan? There are risks | | | | opted for you should ask how this is calculated |
| with anything you do, but some are considerably | | | | and would it make a difference if you worked |
| less than others and any decision you make will | | | | longer. Some cases will see that you are qualified |
| affect you in the future. The first thing you will | | | | for a much larger sum of money in your benefit |
| need to do is to determine the difference | | | | just by working for a few more years extra. If |
| between the two and then calculate which ones | | | | you have opted a different plan, you may want |
| will be the best option for you. | | | | to ask if you can take a lump sum first and the |
| A monthly pension plan is basically a payout of | | | | rest in annuity. It makes a difference whether |
| your pension on a monthly basis, giving the | | | | you are married or not, as your spouse will be |
| individual security for life and guaranteed income. | | | | entitled to exactly half. |
| However the disadvantage is that this rarely | | | | The next thing to do is to calculate how much |
| moves with inflation and so leaves the person at | | | | income you will need on a monthly basis, whether |
| a disadvantage if they need access to a large | | | | it is just enough to cover for overheads or |
| sum of cash later on. There is also very little | | | | enough to enjoy the odd luxuries. Your income |
| opportunity to be flexible in making an investment, | | | | calculation should be completed first before you |
| unless the person is receiving a significant amount | | | | work out your income vs assets. Most people can |
| every month. | | | | do this with the help of a professional advisor or |
| A pension lump sum provides more flexibility in | | | | via an online calculator. This allows you to divide |
| giving a steady stash of money and is good for | | | | your expenses into categories, putting your |
| covering for unexpected expenses or to cover | | | | expenses into perspective. As long as you have |
| for the occasional splurge. Unless the person is not | | | | your basic expenses covered then you can go on |
| careful in how much they spend they can work | | | | to calculate your other expenses. |
| through their money quicker than expected and | | | | Once your income has been calculated you will |
| jeopardize their financial security later on in their | | | | need to cover for unexpected expenses. This is |
| life. Given the recent financial downturn it is | | | | tricky considering unexpected expenses are |
| important for people to be very careful with their | | | | unexpected, but it is a good idea to leave a set |
| cash flow allowing for some money left over for | | | | amount that is substantial enough for you to dip |
| a rainy day. | | | | into when you need to, similar to an emergency |
| This also depends upon what the person wants to | | | | savings. |
| do with their money; whether it is to pay off any | | | | The next thing to do is to decide whether your |
| debts they have left hanging or simply want to | | | | company is reliable enough for a long term |
| pay for some much needed luxuries. Whatever | | | | pension plan. You may have to think about getting |
| the choices you can better prepare yourself and | | | | a private pension plan rather than leaving it up to |
| make a firmer decision if you follow these steps. | | | | receiving it from your company, this is to alleviate |
| If you are taking out a pension scheme with the | | | | any issues or situations beyond your control. |