Today’s post will end the series about taking the cash value or the annuity from your employer when you have contributed to your pension plan for several years. As I gave a brief description of the two possible scenarios, I will outline the pros and cons of each decision:
What is cool about the cash value
– You get to manage your money as you wish.
– You have full flexibility in regards to payment (withdrawals).
– If you pass away, your fund is being 100% transferred into your spouse’s name.
– Since it creates RRSP contribution room, you should not pay much taxes with the “cash” portion you receive.
What sucks about the cash value
– You better invest your money at the right place if you want to retire someday!
– If you can’t live on a budget, the temptation to withdraw a lot of money early at retirement may jeopardize your lifestyle over the long run.
What is cool about the annuity
– You have a guaranteed income until you die.
– Part of your annuity is indexed according to the CPI (depending on your pension plan).
– The level of income you receive is not according to the past performance of the market but according to your income.
What sucks about the annuity
– When you pass away, your spouse will only receive 50% or 60% of you.
– While your annuity is guaranteed; the guarantor is your employer. You have to make sure that it has the financial capability to pay your pension.
I think I pretty much give all the information about the cash value and the annuity. As you can see; depending on your personal situation, one may be better than the other. In the end, the most important thing is to take the right decision.
|How I Suck at Not Paying Debts||Hitting 6 Figures Income at 28|
|How I Get a Huge Income Raise Each Year||Making $125K Online in 12 months|
|How I Buy Blogs||Most Debated Articles: The Primerica Saga|
|How I Have Survived My MBA||What is So Wrong With Making Money?|
|How I run multiples blogs and makes money without burning out|