Here is a common retirement investment scenario for Baby Boomers. Mr. Jones is retiring and has different options available in his pension plan.
- Option 1 – Accept a large lump sum, transfer it tax-free to an IRA and invest it for his future. He is personally accepting the risk of investing the money to help provide for the rest of his and his wife’s life.
- Option 2 – Begin receiving guaranteed monthly payments for the rest of his life (and his wife’s life with survivor benefits). This option places the risks and rewards of investing solely on the pension plan.