The Retirement Decision That Changes Everything
If you're approaching retirement with a union pension, you're facing one of the most important financial decisions of your life — and it's one that can't be undone. The question is simple: do you take a guaranteed monthly check for the rest of your life, or do you take the lump sum and manage the money yourself?
This is often the single most consequential decision in the entire retirement process — and it's one of the most personal. There is no universally right answer. But we believe that for most people who are in good health and have the right guidance, the lump sum has the potential to be the stronger long-term choice. Here's an honest look at both sides.
The Monthly Annuity: Steady, Simple, and Safe
The monthly annuity gives you guaranteed income for life — you physically cannot outlive it. It protects your spouse through the survivor benefit, requires no investment decisions on your part, and some plans even offer inflation adjustments. For someone who values simplicity and peace of mind above all else, this option has real appeal.
The trade-offs, however, are significant:
• Your payment is fixed — it doesn't grow with inflation over time.
• You lose flexibility. Once you lock in, there's no changing your mind.
• You can't leave the remaining balance to your children or grandchildren.
• If you pass away early, the pension plan keeps the money — your heirs receive nothing.
The Lump Sum: Flexibility, Growth, and Legacy
The lump sum gives you a large amount of capital up front. When rolled directly into an IRA, you pay zero taxes at the time of transfer — the money grows tax-deferred. You can invest it, grow it over time, and potentially leave the remainder to your family as an inheritance.3
The trade-offs are real too:
• You bear all the investment risk — the responsibility shifts entirely to you.
• Poor decisions or bad advice can erode the value you spent decades building.
• Without professional guidance, the results can be sobering.
What the data says about going it alone: A 2026 MetLife study found that 1 in 5 retirees who took a lump sum had completely drained their account within just 4½ years of retiring — and of those who ran out of money, 98% said an additional layer of income could have prevented their financial hardship.1
The lesson? The lump sum isn’t the problem. Going it alone is.
Why We Believe the Lump Sum Can be the Right Choice for Some People
When properly managed, the lump sum can offer something the annuity simply cannot: growth potential, flexibility, and generational wealth transfer. The Consumer Financial Protection Bureau notes that you and your spouse may spend 20 or more years in retirement.2 A fixed monthly check that doesn’t keep pace with inflation can quietly lose purchasing power over that time.
The key difference between the retirees who may thrive with a lump sum and those who don’t often isn’t luck — it’s professional guidance. That’s exactly why we run a personalized break-even analysis for every client before they decide. We look at your age, your health, your spouse’s situation, your other income sources, your risk tolerance, and your estate goals before making any recommendation.
Critical detail: If the lump sum is paid directly to you instead of rolled over to an IRA, the IRS requires a mandatory 20% federal tax withholding — and if you’re under 59½, you’ll also face a 10% early withdrawal penalty.3 A single paperwork mistake can cost tens of thousands of dollars. We make sure that never happens.
The Advisor Advantage: What the Data Shows
The difference between retirees who thrive and those who struggle often comes down to one thing: professional guidance — and ideally, getting it before this decision is made. According to Northwestern Mutual's 2024 Planning & Progress Study, people who work with a financial advisor have saved twice as much for retirement as those who don't ($132,000 vs. $62,000), and are far more likely to feel confident about their financial future — 75% vs. just 45%.4
The 2025 study reinforced this even further: 74% of millionaires work with a financial advisor, compared to only 34% of everyone else.5 And a 2024 Voya Financial survey found that 82% of Americans wish they had taken retirement planning more seriously earlier — including seeking professional advice — while nearly half of Americans over 50 still aren't working with a financial professional at all.6
What professional guidance means for your lump sum:
• A personalized break-even analysis comparing your annuity vs. lump sum over your specific life expectancy.
• A direct rollover strategy that avoids the IRS's 20% mandatory withholding and keeps every dollar working for you.
• An investment plan built to last 20–30 years — not just the first five.
• An estate strategy so your remaining balance goes to your family, not back to the plan.
The Bottom Line
The right choice depends entirely on your situation. But one thing is certain: this decision deserves more than a quick conversation with HR. It deserves a full financial review with someone who will run the numbers on your behalf.
If you’re within five years of retirement and haven’t had this conversation yet, let’s talk. We offer a complimentary consultation for union retirees weighing this exact decision — because getting it right once is far better than wishing you had.
Pereira Wealth Management — Guiding Union Retirees to Financial Confidence
Sources & Citations
1. MetLife. (2026). Paycheck or Pot of Gold Study. Conducted by The Harris Poll, October 2025.
2. Consumer Financial Protection Bureau. (2016). Pension Lump-Sum Payouts and Your Retirement Security.
3. Internal Revenue Service. Topic No. 412 — Lump-Sum Distributions.
4. Northwestern Mutual. (2024). Planning & Progress Study.
5. Northwestern Mutual. (2025). Planning & Progress Study.
6. Voya Financial. (2024). Survey Finds All Generations Wish They Started Saving Earlier.
This material is for informational purposes only and is not intended as personalized investment advice. All investing involves risk, including the possible loss of principal. Investment decisions should be made based on an individual’s financial situation, objectives, and risk tolerance. Investing a lump sum involves market risk, and there is no guarantee that investment objectives will be achieved. Returns will fluctuate, and investors may receive more or less than their original investment. Before deciding whether to retain assets in an employer-sponsored retirement plan or roll over to an IRA, investors should consider a variety of factors including, but not limited to, investment options, fees and expenses, services, withdrawal penalties, protection from creditors, required minimum distributions, and the availability of employer stock. Information is from sources believed to be reliable; however, accuracy and completeness cannot be guaranteed.