A pension lump sum can look awfully appealing when the number arrives on paper. One big check feels tangible, flexible, and somehow more satisfying than a monthly deposit that quietly shows up for years.
But that lump sum also turns a pension into a personal retirement project. Instead of the pension plan carrying much of the investment and longevity risk, the retiree takes on more responsibility for making the money last. The Pension Benefit Guaranty Corporation notes that a lump sum can leave retirees responsible for managing investments and avoiding the risk of outliving their money.
