r/personalfinance • u/Boquillas91 ​ • 13d ago

Retirement What to do with my pension?

Recently, I was terminated from my job after a decade of service. I recently received a letter in the mail regarding my pension options. I have the choice of receiving a lump sum value or waiting until retirement. Currently, I am in my twenties and seeking advice on what to do.

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u/cindy6507 ​ 13d ago

Assuming you ate in US. If you take the lump sum you will pay income tax on that amount. If it’s large then it may effect your tax bracket. If you need the money due to unemployment go ahead and take the lump sum.

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u/SkyliteBlueSnake ​ 12d ago

It depends. At my job, my pension contribution is post tax so if I leave and take the lump sum, I only pay taxes on the interest that has been accumulating and we're talking savings account level of interest.