Question: In two more years, I’ll have the choice of taking my defined benefit pension as a lump sum or in monthly payments. I had planned to take the lump sum and invest it, but I’ve noticed that the amount has dropped by about $15,000 since I last checked it a year ago. Previously it had been going up. How can they do that?

Ric: It happens because of changing interest rates. As rates go up or down, so does the amount of the lump sum. We’ve had a subtle change in rates since last year, which explains the lower current amount.

If you’re lucky, rates will move in the other direction, which will increase the amount you’d receive as a lump sum.

Sometimes, people can play the interest-rate game. Say you’re allowed to retire now, immediately receiving the lump sum. But if you’re willing to work another year and you believe interest rates will change, causing your lump sum to rise a lot, you might delay your retirement.

We generally don’t advise such gamesmanship. For one thing, you can’t be sure rates will do what you want. Second, you’re reducing your retirement by a year. Is it really worth it? If you're not sure, call us and ask.