4 Most Common Pension Payouts & How to Decide Which Route to Take

Article Overview

1. Single-Life Annuity
2. Joint-and-Survivor Annuity
3. Lump-Sum Payout
4. Period-Certain or Guaranteed Term
5. Deciding the Best Payout Option for You
6. Ohio Pensions: A Quick Note
7. Final Thoughts

If you’ve worked in Ohio as a teacher, a nurse, or in government service, chances are your retirement plan includes a pension, such as OPERS, STRS, or SERS. When it is time to retire, pensions can feel like both a blessing and a puzzle — after years of saving and working, you finally get a guaranteed income stream. But it is a significant decision that sets the course for retirement income: how do you want to receive those benefits?

The choice isn’t one-size-fits-all. The option you choose affects not only your income but also your spouse, your long-term financial flexibility, and even your legacy planning. At Pleasant Wealth, we work with many women in Ohio who are navigating these decisions, especially within five years of retirement. Here’s a breakdown of the four most common pension payout options and some factors to consider.

1. Single-Life Annuity (Lifetime Only)

This option provides you with a monthly payment for as long as you live. Payments stop when you pass away, meaning there are no survivor benefits for a spouse or loved one.

Pros:

• Typically offers the highest monthly payout of all the options.
• Straightforward — you know what you’ll receive each month.

Cons:

• No protection for a spouse or dependents after your death.
• Not ideal if you want to leave part of your pension as a legacy.

This can work well if you’re single or if your spouse has a strong retirement income of their own. However, it carries risk — especially for women who may live longer than the average lifespan.

2. Joint-and-Survivor Annuity

With this choice, your pension continues to pay benefits to your spouse after your death. You can usually select the percentage your spouse will receive — for example, 100%, 75%, or 50% of your benefit.

Pros:

• Provides ongoing income protection for a surviving spouse.
• Offers peace of mind if your household relies on your pension.

Cons:

• Your monthly payments will be lower than the single-life option.
• The more you choose to protect your spouse, the smaller your monthly check will be.

This option is common among married couples where one partner’s pension is a cornerstone of their retirement income.

3. Lump-Sum Payout

Instead of monthly payments, you may have the option to take your pension as a one-time lump sum, which you can then roll into an IRA or manage on your own.

Pros:

• Flexibility — you control how the money is invested and withdrawn.
• If managed wisely, you may have more opportunities for growth.
• You can leave any remaining funds to heirs.

Cons:

• You take on all the investment and longevity risk.
• Poor investment performance could deplete your retirement savings faster than expected.

This path requires careful planning and discipline, but it can make sense if you want more control over your assets — or if leaving an inheritance is a priority.

4. Period-Certain or Guaranteed Term

This option pays you a pension for your lifetime, but also guarantees payments for a specific number of years (often 10, 15, or 20). If you pass away before that time is up, your beneficiary will continue receiving payments until the period ends.

Pros:

• Balances income security with some legacy protection.
• Ensures your family receives value from your pension, even if you pass away early.

Cons:

• Monthly payments are typically lower than single-life annuity payments.
• If you live well beyond the guaranteed period, your spouse may still face reduced or no benefits.

This can work for individuals who want both personal income stability and some assurance for their heirs.

How to Decide What Pension Payout Option Right for You

The right payout option depends on your life expectancy, marital status, financial needs, and risk tolerance. A few questions to ask yourself:

• Do I need the highest monthly income now, or is it more important to protect my spouse later?
• How comfortable am I with investment risk if I choose a lump sum?
• Do I want to leave a legacy, or is my priority ensuring I don’t outlive my income?

For women especially, longevity is a big factor — women tend to live longer, which makes risk management all the more critical.

If you’re weighing options, it may also help to consider how your pension interacts with Social Security, personal savings, and other retirement income sources. A pension doesn’t exist in isolation; it’s one piece of your overall financial picture.

Ohio Pensions: A Quick Note

Some Pleasant Wealth clients have pensions from OPERS, STRS, or SERS, which come with their own unique rules and options. If you’d like a deeper dive into those specific plans, we’ve put together a guide here: Ohio’s Pension Plans: The Basics of OPERS, STRS, and SERS.

Final Thoughts

Choosing how to receive your pension may be one of the most important retirement decisions you’ll make. And once it’s made, it’s often irreversible. That’s why it pays to slow down, look at your entire financial picture, and get guidance before signing the paperwork.

At Pleasant Wealth, we help women within five years of retirement review their pension payout options in the context of their whole retirement plan. If you’d like to explore which path may be best for you, we’d love to talk.

Schedule a consultation with Pleasant Wealth to review your pension options and build a retirement plan that supports your future.