Pension: lump sum vs annuity decision

Decide between a pension lump sum vs lifetime monthly annuity by comparing the present value of the annuity stream against the lump sum offer.

Lump sum offer

Monthly annuity offer

Your age now

Your life expectancy

Your discount rate %

Use your expected rate of return on the lump sum if invested.Annuity COLA %

Most private pensions: 0%. Government: 2-3%.

Lump sum advantage

Positive = lump sum wins

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