Take a Monthly Pension Over a Lump Sum, Says Wes Moss

""$411 times 12 is $4,932 a year. Oh, 8.5%. Wow. That's pretty strong. It's hard to guarantee yourself 8.5%.""

""To replicate Alex's 8.5% guaranteed payout with risk-free instruments, you would need the 10-year Treasury to roughly double.""

""If Alex takes the pension and lives 20 years, the stream pays out $98,640. To match that from the lump sum, the portfolio has to compound at 8.5% net of fees, taxes, and sequence-of-returns risk every year without fail.""

""As long as you do it with a 'period certain,' because the last thing you want to do is have a pension amount and something happens to you, you die in 5 years, then they get to keep all the money.""

Alex faced a decision between a monthly pension of $411 or a $58,000 lump sum. Investment strategist Wes Moss calculated that the monthly payment yields an 8.5% return, surpassing the 6% threshold that favors pensions. Current interest rates make it difficult to replicate this return with safe investments. If Alex lives 20 years, the pension would total $98,640, requiring an 8.5% annual return from the lump sum to match. Moss advised considering a 'period certain' option to protect against early death.

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