re: Pension or Lump Sum?

$60K on $1MM is a 6% guaranteed distribution, which is pretty high. Usually when we are discussing pensions, or "guaranteed" income, it's better to compare to an asset of similar risk. So what level of treasuries would you need to generate that type of income? Let's assume treasuries are paying 3% for an easy round number. This would mean you would need a bond portfolio of $2MM to produce this type of income. Do you have a Social Security benefit? Let's assume you do and it is $30K per year (it's likely the benefit for you and your spouse is greater), that is another $1MM in treasuries.

So you have equivalent of about a $3,000,000 treasury portfolio. And now that you have another $1MM to invest, even if you had it 100% stocks you would overall only be 25% in stocks and 75% in bonds. So you can be very aggressive and have this stock portfolio have a great chance to grow to a legacy you could leave your family, or help hedge for the unknown, long-term care, illness or whatever.

Just make sure the that pension benefit is for the life of you and your spouse.

If you are interested in a more detailed calculation, find a good advisor to help run some scenarios in retirement planning software.

Edit: Want to clarify that you may not want or need to invest all of the extra $1MM in equities, but the point is to show that you could due to all the mailbox money you have coming in.

One other consideration...get your benefits department with your employer to run some "what if" scenarios around interest rates and your pension. As rates rise, your lump sum will decrease making the pension option more attractive.