types of investment plans for retirement
- Investment

Regular vs Lump Sum – Which One Should You Choose?


There are many types of investment plans for retirement that help you save for the post-worklife. One of them is the annuity or pension plan that assures income for you throughout your life. Typically, annuity plansrequire you to choose between regular or lumpsum payouts. If you are planning to invest in an annuity plan, let’s find out whether regular or lump sum payment would be the best option for you.

When it comes to selecting an annuity plan, you must make sure you are aware of its features and benefits. If you are looking for a secure and comfortable retirement without worrying about your monthly paycheque, purchasing an annuity plan is a way to go. But would you rather get the whole lump sum amount or get a regular monthly income through the plan?

Lumpsum vs Regular pension payments

Pension payments can become a preeminent source of income if you are retired. Not just for you, you can also get a scheme where your spouse can also get your pension payments after your death. So here, a regular income would be a risk-free and safer option for you. Whereas getting lump sum payments will give you more freedom to spend the money as per your wish. You can invest the money as you will, and you can use that money how you see fit.

Lumpsum payment

Getting a lump sum payment usually means getting the whole amount in one go by your annuity plan provider. The best thing about getting a lump sum payment is that you gain access to a huge sum of money, and you can use that amount however you want. You can choose to invest your money somewhere for better returns, you can use that money to start your own business, or you can do whatever you want as you see fit.

The flexibility you get with lumpsum payments is something that you won’t get in regular monthly payments. If you take early retirement and plan a long and comfortable retirement, you can get the lump sum payment and invest that money in the market for better and higher returns. The amount you get back after investing can be used in case of emergencies.

For that, you can check out an immediate annuity plan, where you must pay the amount as per your plan for not less than five years, and you will get great returns.

Regular pension payments

As the name suggests, a regular pension payment takes place every month for the rest of your life after you have retired. In some cases, the pension payment also takes place for the spouse in case of the death of the pension plan account holder. One of the reasons why this kind of pension plan payment are safer is because you get a limited amount every month, and you won’t have to worry about your money getting over. Because as per your plan, you will be eligible to get a certain regular amount every month.

In the regular pension payment method, you will not have to worry about overspending. It is hard to overspend when the amount is limited, and you must spend your whole month using that amount.

Choose a plan wisely, and make sure you decide that will ensure a happy and safe retirement.

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