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"Most people spend more time and energy going around problems than in trying to solve them."
— Henry Ford
By this point you are getting a good sense of how important this decision is—and that it does not need to be an overly complicated one. Our hope is that if you felt overwhelmed before picking up this book, your apprehension has started to subside. The goal is to provide you with enough information to confidently make the decision that's right for you and your family.
As much as that means suggesting what you ought to do, it also means alerting you to what not to do.
Mistake #1
Don't Overthink
Mistake #2
Avoid the Herd
Mistake #3
Don't Trust the Internet
Mistake #4
It's Not a Scam
Mistake #5
Don't Freak Out
Mistake #6
Have a Plan
Mistake #7
Don't Time Rates
There are seven things that could quite possibly impact your future decision in a negative way. These admonitions are all based in real experiences—people have made these mistakes, and they have actually done what is described below.
Mistake #1
Don't Overthink It — Engineers, We're Talking to You
Even if you're smarter than most people, you shouldn't expect to figure out a methodology that a huge, publicly traded company—with the help of teams of outside actuaries and consultants—has somehow missed. We've seen it time and time again, spreadsheet after spreadsheet.
As you ponder your pension decision, we'd exercise caution about checking with your colleagues who have an affinity for Excel. It's not a good idea to sit with them comparing spreadsheets on the various pension payout options, with various growth-rate assumptions, to attempt to beat the system.
“If you look at the payout options from a purely mathematical standpoint, because life expectancy is involved, they're all roughly equal from an actuarial standpoint. You're not going to create a spreadsheet that makes you smarter than every insurance company in the United States.”
There is only one surefire way to “beat the system”—live longer than they anticipate. Of course, they have the law of large numbers on their side. Since you're making an isolated decision, this increases your risk versus when there are thousands of people in the pool.
The math is fine. The application of the math to your specific life is where a financial professional adds value—and where Excel doesn't.
Mistake #2
Avoid the Herd Mentality
As we've said in each chapter of this book, this is a highly personalized decision. What's right for you may not be right for the next person.Asking your co-workers about the pension decision they're going to make, in the belief that if most people are doing something it's probably the right thing to do, is a mistake.
In fact, in the investment world, sometimes it's best to do the opposite of what everyone else is doing.
This decision is yours to make, based on your own unique circumstances. It must be the right choice for you and your family. Your situation is different and distinct from the people you're talking with, no matter how similar they may seem on the surface.
Your retirement is not a survey.
Mistake #3
Don't Rely on What the Internet (or AI) Tells You
The internet was already a scary place when this book was first written. Back then, the warning was about Google—searching “pension lump sum vs. monthly payments” and getting paid ads from large brokerages and insurance firms, mixed with so-called experts who had no business giving financial advice.
That problem hasn't gone away. It's gotten worse.
2026 Reality Check
In 2026, retirees face a much wider—and more confusing—universe of “free advice”:
- AI chatbots like ChatGPT, Claude, and Gemini can confidently produce plausible-sounding answers—sometimes accurate, sometimes flatly wrong, almost always missing the specific rules of your Big Three pension plan.
- TikTok finance influencers with millions of followers and zero credentials are dispensing tax and retirement advice that ranges from oversimplified to dangerous.
- YouTube “experts” package strong opinions as financial planning. Some are credentialed; many are not.
- Reddit threads can be a useful sanity check, but the loudest voice is rarely the most experienced one.
- AI-powered calculators can run optimistic Monte Carlo simulations all day long—and still have no idea about your pension election deadline, your spouse's health, or your state's tax treatment.
Have you ever searched your symptoms on Google when you weren't feeling well? You know how overexaggerated and misleading the internet can be. You have a fever and a cough, and you stumble across a page telling you that you only have weeks to live.
Asking the internet—or an AI—to make your pension decision works the same way.
Use these tools to LEARN
A general-purpose AI can summarize the SECURE Act in 30 seconds—and that's genuinely useful.
Don't use them to DECIDE
It cannot tell you whether you should take the lump sum or run an NUA strategy on your Ford stock.
There is no silver-bullet solution to this decision—you need individualized advice, not generic advice from a website, online forum, or chatbot.
Mistake #4
Don't Think That It's a Scam or a Trick
Part of the reason we spent so much time in Chapter 2 explaining what goes into the pension decision from the company's perspective is to alleviate the concern that they're out to get you.
Many retirees facing this decision are under the impression their company is trying to rip them off. In our opinion, it's quite the opposite. We feel these companies are doing their best to fulfill the promises they've made to you—within the constraints of running a business, satisfying Wall Street, and managing risk on their balance sheet.
A New Wrinkle: Pension Risk Transfers
Many retirees today are hearing—sometimes for the first time—that their pension obligation has been transferred from their employer to an insurance company. The first reaction is often: “They sold my pension. This must be bad.”
It's not.
Pension risk transfers are a structured, heavily regulated way for companies to remove long-term liabilities from their balance sheet. Insurance companies are built to manage exactly this kind of long-tail obligation—far better than a car manufacturer ever was.
Monthly Benefit
Doesn't change
Survivor Benefit
Doesn't change
Safety Net
Changes (see Ch. 3)
Approach this decision with healthy skepticism. Don't approach it with paranoia.
Mistake #5
Don't Freak Out or Tighten Up
Yes, it's an important financial decision that will have an impact on the rest of your life—but you do not want to freak out. Many times, this is a decision you have to make very quickly. It may not even be your choice to retire; sometimes a buyout package or a reduction-in-force forces the timing.
This can be a time of major stress. Please don't get so nervous and so uptight that your ability to make the best decision becomes clouded.
Having perspective helps:
For most people reading this book, the lump-sum-vs-monthly decision is only one part of an overall retirement plan. There's also a 401(k), possibly an IRA, brokerage accounts, savings, Social Security, possibly a working spouse's pension, and possibly real estate. The pension decision is huge—but it is not your only resource.
Take a deep breath. Then think.
Mistake #6
Don't Act Without a Plan
Having a clear vision of your future is the single most important factor in making this decision.
The biggest mistake you can make is to make an impulse decision without thinking it through.
Real Example: A Costly Oversight
We've had clients come in at 55 years old who consolidated their 401(k) and pension lump sum into a single IRA—without a plan to generate income before age 59½.
Had they consulted us first, we would have had them leave some assets in the 401(k), where they would have had access to those funds without an early-withdrawal penalty under the Rule of 55 (covered in Chapter 5).
There are still ways to access IRA funds before 59½—like the 72(t) provision discussed in Chapter 6—but you lose the flexibility of withdrawing on your own schedule.
This is a big decision. You need to take a deep breath, remain calm, and really think it through. But don't drive yourself spreadsheet-crazy in the process. Consult a financial planner who has worked with Big Three retirees before, and make sure that whatever path you take leads to a comfortable retirement.
Mistake #7
NEW FOR 2026Don't Try to Time the Interest Rate Environment
This is a new entry for the 2026 edition—and it's one of the most common mistakes we've watched Big Three retirees make in the past few years.
We covered in Chapter 2 how dramatically interest rates have moved since 2019. Rates were near zero in 2020–2021, then climbed at the most aggressive pace in modern history through 2022–2024, and have been easing since late 2024. Lump-sum values move inversely with rates—when rates spike, your lump sum shrinks; when rates ease, your lump sum recovers.
What we keep seeing in our office is two opposite versions of the same mistake:
Behavior #1: Rushing to Retire
Some retirees see rates climbing and panic-retire—months or even years before they were planning to—purely to capture today's lump sum before the next adjustment.
They hadn't thought through: affordability, healthcare before Medicare, spouse readiness, or the emotional weight of leaving early.
Behavior #2: Delaying Indefinitely
The opposite mistake. Retirees who wanted to retire delay it—sometimes for years—waiting for rates to “come back” and inflate their lump sum.
Meanwhile, they're working through health issues, missing milestones with grandchildren, and grinding through stressful jobs.
Both are bad strategies. Retirement is a life decision, not a market call.
The rate environment matters—meaningfully. But here's the truth: by the time you see the rate move, the recalculation in your plan has often already happened. Most Big Three plans use a stability period and a lookback month to lock the rates used for your lump-sum calculation, often for an entire calendar year.
The Right Framing
Retire when your life is ready, not when the Federal Reserve is. Understand the rate environment as one factor in your decision—but don't let it become the only factor. Plenty of retirees who “missed” the high lump sum window in 2021 still went on to have excellent retirements.
If your plan works at the current rate environment, you're ready. If your plan doesn't work without the rate environment cooperating, you weren't ready in the first place.
A Final Word
The seven mistakes above are real. We've watched all of them play out, often more than once.
Most of them share a common root: acting from emotion rather than from a written plan. Engineers overthink because they want certainty. Coworkers herd because they want safety in numbers. Internet research happens because it feels productive. Panic-retirements and delay-retirements both happen because the rate environment makes people feel out of control.
The antidote to all of it is the same thing: a real, written, personalized retirement income plan, built before the decision deadline arrives. When you have that plan, the noise gets quieter. The pressure gets manageable. The decision gets clearer. And the mistakes in this chapter become much harder to make.
That's where Chapter 8 comes in.