The Lumps in Lump Sum Payments

By Van Dyke, George | Business Credit, April 1999 | Go to article overview

The Lumps in Lump Sum Payments


Van Dyke, George, Business Credit


According to the U.S. Department of Labor, more people are taking their pensions in one, lump sum payment than in lifelong, monthly checks. This means independence for those employees who want to make a clean break from their employer and design an investment portfolio that meets their individual needs.

Unfortunately, statistics also show that many employees are ill-equipped to handle the tens of thousands of dollars they may receive in a lump sum payment. As a result, fewer than a third of employees older than 40 put their entire lump sum into a retirement account, and only 16 percent under the age of 40 do. Instead, they are paying bills, starting businesses, buying cars, and incurring tax penalties that wipe out 10 percent of the payment for those under 59.

Spending even a portion of the money you receive from a lump sum payment can dramatically cut into your retirement income, and the less money you start with, the slower it will grow. In addition, income taxes must be paid on the amount you do not roll over, and a 10 percent tax penalty may apply to any money not rolled over if you are under age 59 (or age 55 if you have separated from service).

What's more, you simply can't rely on benefits such as Social Security or other pension plans to supplement your income in retirement anymore. In fact, according to the Employee Benefit Research Institute (EBRI) in 1996:

* the percentage of an elderly individual's income derived from Social Security declined to 42. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

The Lumps in Lump Sum Payments
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.