Are you one of the dwindling number of American workers with access to a traditional pension? Pensions are most commonly offered to public sector employees, but some private corporations also provide them. And for most people who have these, the biggest decision they must make is how to withdraw the money. Should you opt for monthly checks or take out a lump sum? To help you choose the best option for yourself, here are the pros and cons of the four most common choices.

1. Lump Sum Payout

Most plans allow you to withdraw a lump sum when you reach retirement age. Taking the lump sum means you get a large chunk of money immediately, but you become responsible for making it last. This is a great option when you're confident you can beat the average returns of the pension company or when you plan to purchase a large retirement asset (such as a house). However, it does not guarantee you won't outlive the money. 

2. Monthly Lifetime Checks

Getting a check each month after retirement is the traditional purpose of a pension. It provides stability and makes budgeting easier. These checks also will not run out before you pass away. Find out how checks are adjusted for the annual cost of living to see how well it may or may not keep up with inflation. 

3. Joint Spousal Checks

Many pension plans come with an option to receive a smaller check each month in return for your spouse continuing to draw checks if you pass away. This is a good choice for couples where one spouse is not as prepared for independent retirement as the other, including uneven earners. However, if your spouse will not really need the money, you may do better not to sacrifice the upfront money. 

4. Specific Period Checks

Finally, the least common payout method is to receive checks for just a specific time frame. It could be 10, 15, or 20 years, for instance. Why might you want this option? It's a great way to retire before you can access Social Security or Medicare. Fill the income gap during those early years with your pension. However, this obviously shouldn't be your only source of retirement funds. 

Where to Learn More

Whether you already work for an employer with a pension plan or you're thinking about signing on, it's vital to integrate that pension into your retirement plan. Start by meeting with a professional familiar with retirement planning. With his or her help, you'll choose a great payout method and enjoy more stability and a less stressful retirement.