Over the past few weeks, about four or five of you submitted a question asking for an analysis on pensions and how I think through those.

So I'm going to go through that today. And I imagine if four or five of you submitted that question on my website, which, by the way, as you all know, you can go ahead and submit your question on my website if you'd like, earlier retirement podcast.com that there's a few more who did not submit a question. they're also probably thinking what should I do? So today I'm going to go through my analysis.

If you have a pension, how should you think through taking the lump sum option versus the annuity option? And really the framework behind exactly that. So I'm excited. I'm going to hop in. I'm going to change the format of the show a little bit. If you've been listening for some time and you like it, are you going, are you going to screw it up on me? I promise I'm not. Only trying to think of ways to improve because I asked all of you, hey, what do you want more of? And you guys said, I want more case studies. I want more real life examples from current clients. And I really want to make sure that I know exactly what I'm planning for with an early retirement because there is, of course, a lot of nuance if you're going to retire before 65 and one, never run out of money, but number two, make sure you don't leave anything on the table. Most of you listening, it's not, I don't know what a 401k is. It's I know what it is. Help me optimize it so that I don't leave anything on the table. So if you don't already know, I have an e-book and we're going to get into the pension in just a second. I can't wait. But at the same time, I do want to go through this, which is every time I ask you guys to download my e-book, I'll say, one, something that you're looking forward to never having to deal with again once you're retired. And I'm not telling you guys these responses just to scare you or say, oh my God, that's so sad. But these are real life examples from people who submit to download my e-book. So I'm going to tell you them as well as go over the review of the week. So the first one comes from someone who I'm always going to use a pseudonym, by the way. So I'm just going to call him John.

And his comment of something he's looking forward to never having to deal with again once he retires is never having to pull out my laptop to catch up on work after family has gone to bed. So I don't know if that's something that resonates with all of you guys or just a few of you, but that is the one that I picked this week. and the review of the week.

I'm just pulling up on my you, but that is the one that I picked this week. And the review of the

week, I'm just pulling up on my phone, so sorry for the delay real quick. This one comes from

G-L-D-N-B-Y-5-1-50, who says, awesome podcast for those looking to retire early. My wife and I

listen to Ari's podcast each week, So I imagine that's some dinner conversation

if you guys talk in Roth conversions and other things. Tons of useful information. You don't need

to be an expert to understand it. That I'm happy to hear. I've never heard a financial expert that

advocates the benefits of an early retirement usually tell you how to do if you choose to, but it

almost seems to be discouraged and it shouldn't

be. It's attainable if you plan ahead. This podcast tells you how to do that. So thank you so much for that comment. I appreciate it. And you all probably know my joke. And a lot of you are in the health field who listen to this, but don't be offended by what I'm about to say. But when I went to a doctor a few weeks ago, actually a few months ago now, because I've given this example a few times,

I said, hey, Doc when I went to a doctor a few weeks ago, actually a few months ago now,

because I've given this example a few times, I said, hey, doc, I know that sounded great, I think you think that sounded great. I have no idea what you just said. Okay, so talk to me like I'm five. And I didn't do it in a degrading way in any way, but I literally didn't know what he was talking about. And so oftentimes when I'm interviewing new advisors to join our firm, I'll ask them to explain it to me like I'm five.

And if they use big words that I understand but clients won't, then what good is it? So I am glad that this is resonating. I do want you to go, wow, this makes perfect sense. Like I'm worrying less about money because I understand how these things work. So with all that being said, I'm going to hop in today's topic. For some of you, this won't be a huge decision because everything doesn't rely on your pension decision, whether it's lump sum or annuity. Maybe you've got one or two or three or five million bucks and you just want to make sure you make the right decision with your pension regardless. You don't leave anything on the table. For others, it is everything where they don't have a ton of investments, and whether they take that lump sum or annuity is really going to make or break their retirement planning, and especially if you want to retire early, there's nuance, as you can imagine. So I'm going to just go through an example, as you guys know, that is my favorite way to learn. But before I go through the example, I'm going to give you just high-level overview as to how I think through this. So I'm going to give you an example. But once again, the high-level overview is the following. When you have a pension, you have an option. And there's interest rates and other things involved that we'll talk about. but mainly you have the option to say do i want a guaranteed income source for the rest of my life

do i want my spouse to have a guaranteed income source? Or do I want to take a lump sum option? And we have to ask ourselves, what is going to put the most amount of dollars into our pocket at the end of the day? And that's really what you're asking yourself. Now, on top of that, there's what's called the financial answer and then the real life answer. And more often than not, the lump sum tends to make most sense if you're open to

investing well. If you're not open to investing a certain way, then more often than not,

it can make sense to take the guaranteed income option, also known as the annuity option,

because you don't have to worry about what markets will do. Now, you to worry about inflation and other things if you don't have a cost of living adjustment, but you do have the ability to say, you know what, I don't want to screw this up. I'm going to take the guaranteed income option. I know, God forbid, if something happens to me, my spouse would be okay, or I just am going to

elect the larger benefit for myself. And if I pass away, it goes away, but I understand there's a risk there, I'm okay with it, because I don't want to invest a certain way. So that's the general framework. If you're just looking at, you know, 80% of people that I speak with, the lump sum option tends to make most sense, 20% of time the annuity makes most sense, but that's just so you guys know.

I'm not married to. percent of people that I speak with. The lump sum option tends to make most sense, 20% of time

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