Why Most People Choose Lump Sum
- Lifestyles
- Special Interest
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Author: Reilly Financial Advisors
Released 12 January 2008
Did you know……? Why most people choose the lump sum.
The standard Retirement Income Plan (RIP) benefit is calculated as a Life Annuity with fixed monthly payments. However, many Aramcons choose to elect a lump sum Cash Payment Option.
Why is this?
The decision about how and when to take your RIP can be one of the most important financial decisions you will make regarding retirement. The lump sum payment will frequently provide a much greater degree of flexibility for a retirement that could span 3 to 4 decades. In addition, the Life Annuity option does not allow for key factors that you will need to consider in planning for your retirement. Both inflation and the reality that your individual needs will change over time due to unforeseen circumstances are not adequately addressed.
Those circumstances, which are often unique to your personal needs and preferences, are dependent upon your resources available to fund them. Understanding how those elements interact is the real key to achieving the goal of real financial security.
A second deciding factor in electing a lump sum distribution is often that the lump sum option may allow you to provide for your retirement AND leave something behind for your family and/or charity should you choose to do so. In contrast, the annuity payment option ceases upon your death or the death of your spouse.
This is one example of the many factors you should consider as you construct your retirement plan. For more information regarding this program contact your Personnel Office or Aramco Services Company, P.O. Box 4534, Houston, Texas 77210-4534.
Reilly Financial Advisors
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FAX: 619-698-7260
Email: rfa@rfadvisors.com
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