A pension buyout is an employer offer to convert your future monthly pension benefit into a lump sum payment now. Evaluate by calculating the present value of expected lifetime payments using a reasonable discount rate (5-7%) and life expectancy. If your present value calculation exceeds the buyout offer significantly, keep the pension. Consider: pension survivability if employer fails (PBGC insurance limits), inflation protection (most private pensions don't adjust), surviving spouse benefits. Mass mailings of buyout offers usually favor the employer financially. Get an independent actuarial analysis before deciding; the decision is typically irreversible.
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Pension Buyout
August 22, 2026 · Aditya Gupta
Personal Finance
Related terms
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A 403(b) plan is a retirement plan for employees of public schools, nonprofit hospitals, charities, and religious organizations…
457(b)
A 457(b) plan is a retirement plan for state and local government employees and certain nonprofit employees. Unique…
Annuitization
Annuitization is the process of converting a lump sum (or accumulated annuity value) into a guaranteed income stream,…
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The Backdoor Roth Conversion strategy enables high earners who exceed Roth IRA income limits to fund a Roth…
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