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- When deciding between a lump sum payment or an annuity, consider the following12345:
- A lump sum allows you to collect all of your money at one time, while an annuity is a series of steady payments that are made at equal intervals over time.
- An annuity provides a lifetime steady stream of income, while a lump sum is a one-time payment.
- A lump sum can be used for a range of purposes, including for unexpected medical expenses, while a pension annuity offers a fixed monthly income.
- A lump sum is good for funding long-term investments, while an annuity guarantees larger total payouts.
- If you take the lump-sum payment, the entire winnings would be subject to income tax in that year, and you would be in the highest tax bracket. However, if you choose the annuity option, the payments could come to you over several decades.
Learn more:✕This summary was generated using AI based on multiple online sources. To view the original source information, use the "Learn more" links.An annuity payment often consists of multiple payments over time, such as on monthly, quarterly or annual schedules. A lump sum allows you to collect all of your money at one time. On the other hand, an annuity is a series of steady payments that are made at equal intervals over time. These time periods could be weekly, monthly or annually.smartasset.com/retirement/lump-sum-vs-annuityMany people with a retirement plan are asked to choose between receiving lifetime income (also called an annuity) and a lump-sum payment to pay for their day-to-day life after they stop working. An annuity provides a lifetime steady stream of income while a lump sum is a one-time payment.www.pbgc.gov/wr/benefits/annuity-or-lump-sumA lump sum pension distribution give you your entire pension at once. It offers the flexibility of being able to spend or invest your retirement savings any way you see fit. While a pension annuity offers a fixed monthly income, a lump sum can be used for a range of purposes, including for unexpected medical expenses.www.investopedia.com/articles/retirement/05/lump…When winning the lottery, you can choose between a lump sum or an annuity payment. The lump sum grants immediate cash, while an annuity provides steady income over time. A lump sum is good for funding long-term investments, while an annuity guarantees larger total payouts.www.annuity.org/selling-payments/lottery/If you take the lump-sum payment, the entire winnings would be subject to income tax in that year, and you would be in the highest tax bracket. However, if you choose the annuity option, the payments could come to you over several decades. For example, instead of $10 million in income in one year, your annuity payment might be $300,000 a year.www.investopedia.com/terms/l/lump-sum-payment.… A Lump Sum vs. an Annuity: How to Decide | Charles …
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