Q&A: Which pension choice?

Question: I just finished reading The Retirement Time Bomb and enjoyed it very much despite having no knowledge of finances (my husband has done it all). I am a 50-year-old woman and have been retired for two years. My husband is set to retire next year (2009) and will be 53 years old.

My question involves my husband’s pension that he will receive from the City of Calgary next year. He has a choice to take a lump sum, which he told me has to be converted to a LIRA. The other option is to take the monthly pension income. After reading about LIRAs in your book I am leery of this choice as it is locked-in funds. Plus if we take the lump sum we have to be very careful about what investments we make in the future. I am leaning more toward the monthly pension which would give us peace of mind that we will have some income on a monthly basis. What do you suggest? Thank you for your reply. – M.S., Calgary

Gordon Pape answers: My answer is almost always the same when asked this type of question – take the pension. It provides certainty of income which is extremely important these days. Moreover, since your husband’s employer is the City of Calgary there is little likelihood that the pension plan will even run into trouble.