As you near retirement, one of the biggest decisions you’ll face is whether to commute your pension or take a monthly pension payout. Both options have their benefits and drawbacks, and the decision can be challenging to make on your own. This is where a Financial Planner from Harmer Wealth Management can assist in helping you determine which option is best for your specific financial and retirement needs.
First, let’s define what we mean by “commuting your pension”. Commuting your pension means taking a lump sum payment of the value of your pension plan and transferring it to an investment vehicle, such as an RRSP or a LIRA. This option gives you more control over your retirement savings, but also requires you to manage your own investments and assume the risk of market fluctuations.
On the other hand, taking a monthly pension payout means that you receive a regular income stream from your pension plan for the rest of your life. This option provides you with a steady and predictable income in retirement, but also limits your control over your retirement savings.
There are many benefits to commuting your pension, and a Financial Planner can help you understand these benefits and determine if this option is right for you. Here are just a few of the advantages of commuting your pension:
- Greater Control Over Your Retirement Savings: When you commute your pension, you have more control over how your retirement savings are invested. This can be especially beneficial if you have a good understanding of investing and want to maximize your returns.
- Flexibility: With a lump sum payment, you have the flexibility to use your retirement savings as you see fit. This can be especially helpful if you have other financial goals, such as paying off debt or making a large purchase.
- Potential Tax Benefits: Depending on your personal financial situation, commuting your pension may offer tax advantages. A Financial Planner from Harmer Wealth Management can help you understand the tax implications of commuting your pension and determine if this option is right for you.
- Estate Planning: Commuting your pension can also be beneficial for estate planning purposes. With a lump sum payment, you can pass your retirement savings on to your heirs, whereas with a monthly pension payout, the payments usually end when you pass away.
When determining whether to commute your pension or take a monthly payout, it is important to consider your personal financial situation, retirement goals, investment knowledge, and risk tolerance.
Our team of experienced Financial Planners will take the time to understand your specific financial situation and retirement goals. We will then provide you with a personalized retirement plan that takes into account all aspects of your personal finances, including your pension plan. We will help you evaluate your options and determine which option is best for your specific financial and retirement needs.
In conclusion, the decision to commute your pension or take a monthly payout is an important one that requires careful consideration. By working with a Financial Planner, you can gain a better understanding of your options and make an informed decision. We believe that commuting your pension can be a great option for many people, and we would be happy to help you determine if this option is right for you. Contact us today to schedule a consultation.