FP Answers: Should I commute my pension and take $1.1 million to retire now?

A reader asks if he should take the $1.1 million cash value of his pension or wait for a guaranteed $80,000 a year. Our expert has an answer.

In an increasingly complex world, the Financial Post should be the first place you look for answers. Our FP Answers initiative puts readers in the driver’s seat: you submit questions and our reporters find answers not just for you, but for all our readers. Today, we answer a question from Andrew about commuting his pension so he can retire now, four years before he turns 60.Article contentSign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.

Andrew, if you commute your pension to a $1.1-million investment portfolio, how comfortable will you be depleting it over your lifetime to match what the pension would have provided? What makes you think that? Now, there are reasons why commuting a pension may make sense and they often revolve around things such as a shortened life expectancy of the pensioner, partner or both, wanting to leave money to heirs or wanting a higher income earlier in retirement.Article content

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