by. Herb Weisbaum
A pension, for those lucky enough to have one, offers a guaranteed check every month for the rest of your life upon retirement. But a number of companies are now offering an alternative—a pension advance, typically made in one lump sum payment. Their pitch, aimed at military and government retirees with generous pension benefits and those with bad credit, is mighty appealing: You can receive cash now to pay for today’s bills.
But there’s a catch—in order to get tomorrow’s money today, you have to sign over future pension payments for several years—and the price is steeper than many realize.
“It’s just a lousy deal,” said John Wasik, a personal finance columnist and author of “Keynes’ Way to Wealth.” “I wouldn’t recommend this for anyone under any circumstances because the fees are so high.”
Another costly gotcha: You may be required to buy a life insurance policy that names the pension advance company as beneficiary to protect them if you die.
Mark Corbett runs the website Buy Your Pension, which helps facilitate pension sales. He told TODAY that a pension advance is not for everyone, but he believes it can be beneficial for some people.continue reading »