road with hills

Retiring With a Pension? Interest Rates are Impacting Your Lump Sum

Loren Merkle, CFP®, RICP®, Certified Financial Fiduciary

Attention pension plan owners! This information is for you. As interest rates are rising, pension plan lump sum payouts are decreasing. Have you run your calculations lately? You may have noticed that the lump sum offer is going down.

Roughly 15% of private-sector workers have access to a traditional pension. Many companies that offer traditional pensions allow workers to take their benefits in a lump sum instead of an annuity. That annuity is typically a monthly payout.

The lump sum payout is calculated using a mathematical formula that includes interest rates. The higher the rates used, the smaller the payout to you. The Federal Reserve has raised interest rates at five straight meetings this year. There is talk of one more 1.25% lift before the year is over.

Interest rates do not directly impact the pension annuity (those monthly payments). Those payments are generally determined by a formula that includes age and years of service.

Rising interest rates can make it harder to choose between a lump sum or an annuity. Watch the video above to learn more about the action steps you can take today to help you make the best pension decision for you!


YouTube Video Link:

Understanding Retirement Income Strategies | A Mindset Shift

March 3rd, 2024

CERTIFIED FINANCIAL PLANNER™ Loren Merkle discusses the crucial mindset shifts needed when rethinking […]

Read More

Retire Before 65 by Rethinking Your Health Care Options

February 25th, 2024

Reclaim your Go-Go years! In this episode of Retiring Today, we’ll be discussing […]

Read More

How to Build Your Investment Portfolio for Retirement

February 18th, 2024

CERTIFIED FINANCIAL PLANNERTM Loren Merkle discusses the important investment mindset shift needed for retirement […]

Read More

Understanding Taxes in Retirement

February 11th, 2024

In this episode of Retiring Today, Loren Merkle and Chawn Honkomp discuss the […]

Read More

3 Ways to Overcome The Fear of Running Out of Money in Retirement

February 4th, 2024

In this episode of Retiring Today with Loren Merkle, we discuss three practical […]

Read More

2024 By The Numbers

December 14th, 2023

Social Security benefits, Medicare premiums, and contribution limits are increasing in 2024. Here […]

Read More

Who Pays Taxes on Social Security And Why?

November 9th, 2023

Social Security is an important part of your retirement income. That’s why we […]

Read More

Medicare Part B Premiums to Increase in 2024

October 12th, 2023

The standard monthly cost of Medicare Part B will increase by 6% in […]

Read More

It’s Almost Time to Revisit Your Medicare Plan

September 14th, 2023

Hello, it’s me — your friendly Director of Medicare, AnnaMarie Morrow, here to […]

Read More

Three Part Series On Social Security: Part Three

August 10th, 2023

How a Job Impacts Social Security This Retirement Report is the last in […]

Read More

Ready to take your retirement to the next level?

Let's chat! Schedule a RetireReady Call to talk with a retirement planner about your retirement vision.

Ready to take your retirement to the next level?

Let's chat! Schedule a RetireReady Call to talk with a retirement planner about your retirement vision.

Call Now Button