January 12, 2012 at 8:49 pm #148920
It depends on several factors.
- What is your current age – this makes a difference when considering how much income you need in retirement. Are you old enough to collect social security? How much can you draw off any current retirement savings at the time you retire? (Sometimes there are age-bands associated with annuities…as in you can draw more as you get older).
- What is your current health situation and how much is your insurance going to cost you in retirement? If you are sick or have a pre-exisiting condition that may make you ineligible for a private insurance or a spouse’s policy, you may want to weigh your options.
- What is the future of your retirement plan? If you retire now will you be getting a greater payout (long-term) than if you wait 2-5 years longer? This happened to my Mother. She was a teacher for 30 years. She wanted to do the 30+5 in order to draw a larger amount off of her state retirement. Unfortunately for her, the state was restructuring the retirement system this year. If she would have stayed for the +5 she would have lost 20% instead of gaining 20%. In her case, it made more sense to take the buyout on top of survival benefits with her retirement.
- Which brings up another point. When looking at whether or not to take survivor benefits on your retirement (which means they pay your spouse for a set time, or life, after you die) or to take a lump-sum, the above factors must also be considered along with any retirement savings that your spouse has, and your spouses current health.