What Would a Financial Advisor Do?

If you’re facing the Intermountain Health pension decision, you’ve probably asked yourself:

“What would a financial advisor actually do in my situation?”

It’s a fair question. After all, advisors understand markets, taxes, income planning, and retirement risks. So if we were personally in your shoes — lump sum or monthly pension — what would we choose?

Let me give you an honest answer.

My Personal Lean: Control and the Lump Sum

If I were making this decision for myself, I would take the lump sum almost nine times out of ten. Why? Because I like having control over my money.

I’m comfortable with market volatility. I believe in long-term investing. And I trust my ability to stay disciplined — not to panic in downturns and not to overspend in the early years of retirement.

Taking the lump sum would allow me to:

• Invest strategically
• Create an income stream tailored to my needs
• Adjust that income over time
• And leave something meaningful behind for my family

With the right retirement income structure in place, I could design a monthly paycheck that potentially grows over time — something a fixed pension payment cannot do. And at the end of my life, there would still be assets remaining for the next generation. That’s compelling.

Another Advisor’s Take: Rollover With a Plan

Other advisors on our team share a similar perspective, but with nuance. One approach many advisors would take is:

• Roll the lump sum into the Intermountain 401(k) initially
• Keep it there while still working
• Then consider moving it to an IRA at retirement

Why? Most 401(k) plans are built primarily for accumulation. They are designed for younger employees building wealth. The majority of investment options are stock-based.

When retirement begins, the focus shifts from accumulation to distribution. And that often requires more conservative and flexible tools than a typical 401(k) lineup provides. So while rolling to the 401(k) may be efficient while working, transitioning to an IRA later can allow for:

• Broader investment flexibility
• More conservative income-focused options
• Greater distribution control

Again, the common theme is control paired with planning.

The Important Caveat

Despite our take on it, the lump sum is not automatically the right answer. If you:

• Strongly dislike market volatility
• Know you won’t stay disciplined during downturns
• Tend to spend aggressively
• Don’t have a structured income plan

The lump sum can become a problem instead of an opportunity. Some people know themselves well enough to admit:

“If I take that lump sum, I might keep it in cash out of fear . . . or I might overspend it in the first few years.”

If that’s you, the monthly pension may be the better fit. There is wisdom in knowing your personality.

It Depends on Your Entire Financial Picture

Like almost everything in personal finance, the right answer is:

It depends.

Specifically, it depends on:

• When you plan to retire
• How much you’ve saved outside the pension
• Your Social Security strategy
• Your income needs
• Your comfort with volatility
• Your tax situation

For example, if your pension would represent your only conservative income source, locking in that 5% growth until 65 and using it as your “safe money” might make sense, allowing your 401(k) to stay invested more aggressively.

But if you already have other conservative assets or guaranteed income sources, taking the lump sum and investing it for growth could provide more long-term flexibility.

You cannot look at this decision in isolation. It must fit into the entire retirement blueprint.

The Key Takeaway

If you’re wondering what most advisors would personally choose? Most would lean toward the lump sum because of the control, growth potential, and legacy flexibility.

But here’s the more important truth:

The best choice for you depends entirely on your situation . . . your temperament, income needs, assets, goals and discipline.

This decision should not be made in a vacuum. It should be made within a comprehensive retirement income plan that coordinates your pension, 401(k), Social Security, taxes, and long-term objectives.

If you’d like help evaluating how this fits into your full financial picture, we’re happy to walk through it with you.

Peterson Wealth Advisors is a registered investment adviser. Information presented is for educational purposes only. Please consult a qualified financial advisor before implementing any strategy.