Rising interest rates change calculations on pensions for some potential retirees

Rising interest rates change calculations on pensions for some potential retirees

Higher interest rates are good for our cash and checking accounts, but not always good for pension holders. Rising interest rates have an inverse relationship with the lump sum value of a pension. As interest rates rise, the value of a pensioner’s lump sum could decrease. For this reason, I see more pensioners who want to take a lump sum do so now rather than waiting.

I also see annuity rates improving as interest rates rise, pushing annuity income potentially higher than pension income (see chart below). There’s a lot to consider if you’re currently on a pension. Let’s review.

Advantages and disadvantages of taking a lump sum


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