MarketWatchOpen original source
Jul 21, 2026, 6:41 PM UTC Alisa Wolfson
MarketWatch Picks highlights items we think you’ll find useful; we are independent of the MarketWatch newsroom. We earn a commission from some links in our articles. Learn more
Have an issue with your financial planner or looking for a new one? Email questions or concerns to picks@marketwatch.com.
Question: “I worked for a utility for almost 20 years and left to stay at home with my children. I still have a vested pension that I can collect and if I wait until I’m 65 (I’m currently 57), I will collect about $800 a month. I have other investments that are managed by a financial adviser at a popular investment firm. He recently asked if I had considered withdrawing that pension as a lump sum and moving it into my retirement account. My other accounts with them have done very well and I have been able to live (modestly) off them for over a decade. What should I do?”
Answer: There are many variables to consider before deciding whether to take your pension as a monthly benefit or as a lump sum — and you may want to consider who this advice is coming from and why they might be giving it. “When your adviser receives a large influx of capital, such as a lump sum pension payment, the income for both the adviser and their firm inevitably increases. This situation can create a conflict of interest that might influence the adviser’s judgment,” says certified financial planner Alonso Rodriguez Segarra at Advise Financial. “If you were to receive that money as a monthly pension instead, the adviser would not have that additional asset under their management.”
Should you want a new adviser, you can find one at CFP Board, NAPFA or through this free tool that can match you to fiduciary advisers, from our ad partner SmartAsset.
But even before we get into your adviser’s motivations and whether you might want a new one, let’s first figure out whether a lump sum might make sense for you. “The first question is how much the lump sum offer would be, because that amount can be compared with the value of receiving about $800 a month starting at age 65,” says certified financial planner Ryan Haiss at Flynn Zito Capital Management.
By his assessment, financial adviser Trevor Houston at ClearPath Wealth Strategies says this isn’t so much a pension question as it is an income question. “You need to be aware of the importance of income in retirement. Eight hundred dollars a month isn’t a huge income stream, but certainty of income provides something that investment accounts don’t necessarily provide.” says Houston. “I can’t tell you [whether or not] the pension is the right choice. I’ve seen certain pension plans that are tough to beat because of the income they provide over a person’s lifetime. The lifetime income is so strong and reliable that it’s hard to replicate without taking on additional risk.”
If your pension offers you $800 a month, that’s worth a commuted value (the lump sum of money you would need today to replicate what your pension promises to pay) of about $160,000 to you at age 65, says certified financial planner Joe Favorito at Landmark Wealth Management.
“You would need to get at least $140,000 up front now in order to make it worth your while. Keep in mind that the pension comes with guarantees, but the true value of that pension is a commuted value of $160,000. The way to arrive at that is to get a quote from an insurance company and ask what the cost of a single life immediate annuity would be at age 65 to pay $800 a month. It will likely be around $160,000,” says Favorito.
What’s more, if you need the $800 a month, Favorito says you may want to consider keeping the pension. “If you don’t need it, the lump sum is the better option, as you can grow the asset for a larger income later or pass it onto heirs,” says Favorito.
Keep in mind that health and longevity are also important. “If you expect to live a long life, the monthly pension may become more valuable, while serious health concerns could make the lump sum more appealing. You should also confirm whether the pension covers only your life, whether it includes a survivor benefit for a spouse and whether it has any cost of living adjustment,” says Haiss.
Another option is to move the funds from the pension into an IRA, says Chuck Czajka, founder of Macro Money Concepts. “You should also consider an indexed annuity with a performance trigger. This way, you can control the money yourself, rather than leaving it up to your previous employer,” says Czajka.
What really matters here is comparing the lifetime income provided by the pension with the potential lifetime income that could come from the lump sum. “Pensions are not all the same. It can depend on how that particular pension plan is funded, how the lump sum was calculated and what your retirement income needs are. Which choice can provide the most comfortable income and give you the greatest confidence about the future? In my experience, that income security is what creates retirement confidence,” says Houston.
The answer here isn’t black and white. To truly assess your adviser’s motivation, remember that you can always inquire about whether they’re a fiduciary at all times. You can also ask them to run the numbers for you so you can see why their recommendation may or may not make sense.
An adviser can run projections to see what the rate of return of the lump sum would need to earn to match or exceed the pension, factoring in taxes, fees, inflation and market risk. “Your risk tolerance matters, because the pension offers predictable income while the lump sum gives you more flexibility but also shifts the investment risk to you,” says Haiss.
Questions edited for brevity and clarity. By emailing your questions to The Advicer, you agree to have them published anonymously on MarketWatch; they may appear anonymously in other media and platforms.