<prompt> Human: My dad is 63 and is considering retirement, at least from his current employer he likes his job and will probably work elsewhere for a few more years. He has a pension and has been offered the choice of a lump-sum payment of 380,000 recently reduced by 30k, which adds to his belief its the better choice or a yearly pension of 33kyear. He is leaning towards the lump-sum but he doesnt seem interested in running the numbers to see if that makes the most sense. I was going to whip something up in Excel to help him make a more informed decision as to which option makes the most sense but I thought there may already be a tool for this. Any help is appreciated.  <response>: The pension annuity and lump sum are actuarially equivalent, so theoretically there is no difference. In practice, you need to consider 1 is your father healthier than average and 2 what interest rates were used to determine the lump sum. If he is healthier than average, the annuity might make sense. If you can expect to beat the interest rate that was used to calculate the lump sum which was probably in the 3-5 range, then the lump sum might make sense. Theres a bit more security in the annuity because of protections such as the PBGC, plus theres the administrative simplicity of just receiving a check and not having to invest the money yourself. 