Clear Money Guide
What this guide covers
A quick view of the questions and evidence developed below.
Updated July 31, 2026. Quick answer: a pension election is usually irreversible and is made once, under a deadline, on a form that explains none of the tradeoffs. Two choices carry almost all the value. The first is lump sum versus income: the lump sum is calculated using interest rates, so the same pension is worth visibly different amounts in different years, and rolling it to an IRA can close the age-55 penalty exception you would otherwise have had. The second is single life versus joint and survivor, which is a decision about your spouse’s income after you die and is where the largest regret concentrates. Annuities you already own are a separate problem: getting out of one without triggering tax is possible, and the rules reward reading them first.
Related reading on this site: IRS Publication 939.
More on public pension systems, topic by topic: Massachusetts retirement repaying withdrawn deductions, Massachusetts teacher out-of-state service credit and Massachusetts pension after leaving service.
More on public pension systems, topic by topic: Arkansas LOPFI service credit purchase, Arkansas LOPFI DROP and Arkansas LOPFI return to work after retirement.
More on public pension systems, topic by topic: Delaware SEPP disability pension, Delaware SEPP early retirement and South Carolina PORS return to work on disability.
More on public pension systems, topic by topic: Illinois SURS employment after retirement, Vermont VSERS employment after retirement and Vermont VSERS early retirement.
More on public pension systems, topic by topic: Arkansas ATRS T-DROP, Arkansas ATRS disability retirement and Arkansas ATRS working after retirement.
More on public pension systems, topic by topic: Ohio SERS reemployment after retirement, Ohio SERS disability benefits and Ohio SERS divorce and support orders.
More on public pension systems, topic by topic: North Carolina LGERS working after retirement, North Carolina LGERS retirement allowance increases and North Carolina LGERS disability retirement.
More on public pension systems, topic by topic: Maine PERS disability retirement, Maine PERS COLA and Maine PERS working after retirement.
More on public pension systems, topic by topic: Nevada PERS service credit purchase, Nevada PERS working after retirement and Nevada PERS disability retirement.
More on public pension systems, topic by topic: LACERS early service retirement, LACERS disability retirement and LACERS retirement payment options.
More on public pension systems, topic by topic: Montana PERS purchase of service, Montana PERS working after retirement and Montana PERS GABA.
More on public pension systems, topic by topic: NHRS working after retirement, NHRS accidental disability retirement and NHRS purchasing service credit.
More on public pension systems, topic by topic: PA SERS return to service, PA SERS domestic relations orders and PA SERS purchasing service.
More on public pension systems, topic by topic: Michigan MPSERS post-retirement increases, Michigan MPSERS working after retirement and Michigan MPSERS disability retirement.
More on public pension systems, topic by topic: NJ PFRS ordinary disability, NJ PFRS accidental disability and NJ PFRS service credit purchase.
More on public pension systems, topic by topic: Indiana 1977 Fund DROP, Indiana 1977 Fund disability retirement and Indiana 1977 Fund reemployment.
More on public pension systems, topic by topic: Illinois SERS QILDRO, Illinois SERS early retirement and increases and Ohio Police and Fire DROP.
Retirement forms read line by line: Form 4972, Form 4972 Part I and Form 4972 lines 18 to 30.
IRS worksheets from the 2025 Form 1040 instructions, read line by line: Simplified Method Worksheet.
More IRS forms and schedules, read line by line: Form W-4P instructions.
Whether your state taxes the annuity income is answered state by state: state tax on annuity income, by state.
The lump sum decision
- The 20 Percent Held Back From a Pension Lump Sum Is Avoidable in One Step
- Your Plan May Be Barred From Paying You a Lump Sum
- Why Your Pension Lump Sum Moved When Rates Did
- You Cannot Roll Over a Monthly Pension, and That Is the Door That Closes
- Your Employer Offered a Pension Buyout: the Six Questions That Decide It
- The Age-55 Exception Dies the Moment You Roll the Money to an IRA
- The Pension Break-Even, Computed From the Two Numbers You Already Have
Survivor options and what a spouse keeps
- Single Life or Joint and Survivor: You Are Buying Insurance on the Second Death
- Spousal Consent to Waive a Survivor Annuity Takes Three Things, Not One
A pension election is made once, and it is usually irreversible.
If a buyout offer or an election deadline is in front of you, this is the clearest case for a second opinion before you sign. The matching service below introduces you to advisers who pay to meet you.
Before you start, what actually happens. The form is run by Kapitalwise, our advisor-matching partner. Kapitalwise sends your details to advisers who pay for the introduction, so expect calls and texts. Clear Money Guide may earn a referral payment through this service, whether or not you ever hire anyone. This is free to you and there is no obligation to hire anyone.
The Kapitalwise form opens here — you stay on this page.
What happens when you press the button
It asks about nine questions — age, investable assets, location — then your name, email and phone number, and verifies the phone by text. Nothing loads and nothing reaches Kapitalwise until you press the button.
Getting out of an annuity
- You Can Leave the Contract Without Leaving the Tax Deferral
- Pledging an Annuity Is Taxable Before Any Money Moves
- A 1035 Exchange Is a Tax Rule, and the Surrender Charge Is Not a Tax
- Money Comes Out of an Annuity Gain First, Basis Last
- The Annuity Penalty Is Not the Retirement-Account One
Other pension and annuity questions
- An Annuity Owned by a Trust May Stop Being an Annuity for Tax
- The Annuity You Already Own: Keep It, Change It, or Get Out
- The Clock Starts When the Owner Dies, Not the Annuitant
- What PBGC Guarantees If Your Pension Fails, and When the Cap Actually Binds
More on public pension COLAs for 2027, system by system: the MOSERS COLA for 2027 and the 2026 figure, the Minnesota PERA COLA for 2027 and the 2026 increase, the TCRS COLA for 2027 and the July 2026 figure, the PSRS/PEERS COLA for 2027 and the 2026 figure, the Nevada PERS COLA schedule and the latest CPI cap, the TRS Georgia COLA rule and the latest announcement, the Maryland state pension COLA for 2027 and the 2026 rate, the INPRS COLA for 2027 and the 2026 13th check, the New Jersey PFRS COLA status for 2027 and the Oklahoma TRS COLA for 2027 and the 2026 increase.
More on public pension COLAs for 2027, system by system: the Florida FRS COLA for 2027 and the 3% statutory rule, the CalPERS COLA for 2027 and the May 2026 adjustment, the CalSTRS COLA for 2027, the 2% adjustment and SBMA, the IMRF COLA for 2027 and the 2026 increase, the Arizona ASRS benefit increase rule for 2027, the NYSLRS COLA for 2027 and the September 2026 percentage, the Texas ERS COLA status for 2027 and the last increase, the Pennsylvania SERS COLA for 2027 and the 2026 increase, the Ohio OPERS COLA for 2027 and the 2026 figure and the Wisconsin WRS annuity adjustment for 2027 and the 2026 figure.
Estimate a public pension benefit from the system’s printed formula: TRS Texas retirement calculator, TRS Georgia retirement calculator, NC TSERS retirement calculator, FRS Pension Plan retirement calculator, TRS Illinois retirement calculator, IMRF retirement calculator, ERS of Texas retirement calculator, Nevada PERS retirement calculator and NC LGERS retirement calculator.
Still more on public pension COLAs for 2027, system by system: the Pennsylvania PSERS COLA status for 2027 and the 2026 increase, the Illinois TRS COLA for 2027 and the Tier 1 and Tier 2 rules, the Virginia VRS COLA for 2027 and the 2026 rates, the North Carolina TSERS COLA status for 2027 and the 2026 supplement, the Colorado PERA annual increase for 2027 and the July 2026 figure, the Washington DRS COLA for 2027 and the 2026 table, the New Jersey PERS COLA status for 2027 and the 2011 suspension, the New Jersey TPAF COLA status for 2027 and the 2011 suspension, the Massachusetts MTRS COLA for 2027 and the 2026 vote, the Georgia ERS COLA for 2027 and the July 2026 adjustment, the Louisiana TRSL COLA status for 2027 and the PBI history and the South Carolina SCRS COLA for 2027 and the fixed 1% up to $500 rule.
Still more on public pension COLAs for 2027, system by system: the Kentucky KTRS COLA for 2027 and the fixed 1.5% rule, the Utah URS COLA for 2027 and the newest URS figure, the Oregon PERS COLA for 2027 and the 2026 rules, the Iowa IPERS COLA and dividend status for 2027, the Alabama RSA COLA status for 2027 and the 2006 COLA, the Texas TRS COLA status for 2027 and the 2023 adjustment, the Connecticut SERS COLA for 2027 and the CPI-W formula, the Ohio SERS COLA for 2027 and the 2026 increase, the Ohio Police and Fire COLA formula and 2027 status, the Kansas KPERS COLA status for 2027 and the last increase, the Idaho PERSI COLA for 2027 and the 2026 adjustment and the Minnesota MSRS COLA for 2027 and the 2026 rate.
Still more on public pension COLAs for 2027, system by system: the Oklahoma OPERS COLA for 2027 and the 2026 increase, the Arkansas ATRS COLA for 2027 and the standing 3% rule, the Arkansas APERS COLA for 2027 and the hire date rule, the Kentucky KERS COLA status for 2027 and the last increase, the Kentucky CERS COLA status for 2027 and KRS 78.5518, the Missouri LAGERS COLA for 2027 and the 2026 adjustment, the New Mexico PERA COLA for 2027 and the July 2026 rates, the New Mexico ERB COLA for 2027 and the July 2026 factors, the Montana PERS GABA for January 2027 and the hire date rates, the Nebraska NPERS School Plan COLA for 2027 and the July 2026 increase, the Hawaii ERS COLA for 2027 and the fixed rates by membership date and the Rhode Island ERSRI COLA for 2027 and the 2026 increase.
Still more on public pension COLAs for 2027, system by system: the Illinois SERS COLA for 2027 and the Tier 1 and Tier 2 rules, the West Virginia PERS and TRS COLA status for 2027 and the 2023 payments, the New Hampshire NHRS COLA status for 2027 and the 2019 COLA, the Wyoming WRS COLA status for 2027 and the self-funded 1%, 2% or 3% option, the Worcester Regional Retirement System COLA for 2027 and the 3% on $16,000 grant, the Oklahoma Police Pension COLA for 2027 and the 2026 increase of 3% or 6%, the West Virginia State Police Plan B COLA for 2027 and the fixed 1% rule, the West Virginia EMS Retirement System COLA question for 2027, the West Virginia Deputy Sheriff Retirement System COLA question for 2027, the Washington State Patrol COLA for 2027 and the 3% capped CPI rule, the Washington LEOFF COLA for 2027 and the Plan 1 and Plan 2 rules and the Vermont VSERS and VSTRS COLA for January 2027 and the 4.30% CPI-U change.
Still more on public pension COLAs for 2027, system by system: the Vermont VMERS COLA for January 2027 and the half-of-CPI rule, the Ventura County VCERA COLA for 2027 and the 3% cap with banking, the UC Retirement Plan COLA for 2027 and the status of the next increase, the Tulare County TCERA COLA for 2027 and the 3% and 2% caps, the Texas TMRS COLA for 2027 and the city-by-city 30%, 50% or 70% options, the Stanislaus County StanCERA COLA for 2027 and the 3% cap with a COLA bank, the St. Louis Employees’ Retirement System COLA for 2027 and the 5% yearly cap, the South Dakota SDRS COLA for July 2027 and how the board sets it, the South Carolina PORS COLA for 2027 and the fixed 1% up to $500 rule, the Sonoma County SCERA COLA status for 2027 and the last COLA in 2008 and the San Joaquin County SJCERA COLA for 2027 and the 3% cap with a COLA bank.
And more public pension COLAs for 2027, system by system: the Alaska PERS and TRS adjustment for 2027 and the 2025 figures, the Arizona CORP increase for 2027 and the 2026 figure, the Arizona PSPRS increase for 2027 and the 2026 figure, the Arkansas ASPRS COLA for 2027 and the standing 3% rule, the Arkansas LOPFI COLA for 2027 and the standing 3% compound rule, the Colorado FPPA COLA for 2027, the Connecticut MERS COLA for 2027, the Connecticut TRB COLA for 2027, the Delaware County and Municipal Police/Firefighters pension COLA for 2027, the Delaware State Employees’ pension COLA for 2027 and the Georgia PSERS COLA paid in July 2026 and the 2027 status.
And more public pension COLAs for 2027, system by system: the Illinois JRS COLA for 2027 and the Tier 1 and Tier 2 rules, the Illinois SURS COLA for 2027 and the Tier I and Tier II rules, the Iowa MFPRSI annual escalator for July 2027, the Kentucky SPRS COLA status for 2027 and the last increase, the Louisiana LASERS COLA for 2027 and the 2026 increase, the Louisiana LSERS COLA for 2027 and the last increase, the Maryland LEOPS COLA for 2027 and the 2026 rate, the Massachusetts state and teacher COLA for fiscal year 2027, the Michigan MERS COLA for 2027 and how it is set per division, the Louisiana MERS COLA for 2027 and the 2025 increase and the Louisiana MPERS COLA for 2027 and the 2022 increase.
And more public pension COLAs for 2027, system by system: the Louisiana Firefighters’ Retirement System COLA for 2027 and the 2026 increase, the Louisiana Sheriffs’ Pension Fund COLA for 2027, the Louisiana Parochial Employees’ Retirement System COLA for 2027, the Louisiana Assessors’ Retirement Fund COLA for 2027, the Louisiana Clerks of Court COLA and its 2027 status, the Louisiana District Attorneys’ Retirement System COLA and its 2027 status, the Louisiana Registrars of Voters COLA and its 2027 status, the Michigan MPSERS COLA for 2027 and the fixed 3% rule, the Michigan State Police COLA for 2027 and the 2% rule and the Minnesota PERA Police and Fire COLA for 2027 and the 2026 increase.
Estimate a public pension benefit from the system’s printed formula: Oklahoma TRS retirement calculator, MOSERS MSEP 2011 retirement calculator and Minnesota MSRS retirement calculator.
And more public pension COLAs for 2027, system by system: the Pennsylvania PMRS COLA for 2027 and Act 21 of 2026, the Oklahoma OLERS COLA for 2027 and the last 0%, 2% or 4% increase, the Oklahoma Firefighters Pension COLA for 2027 and the 3% or 6% increase from November 2026, the Ohio Highway Patrol Retirement System COLA for 2027 and the 0.0 to 3.0% board range, the NYSTRS COLA for 2027 and the 1.7% for September 2026 through August 2027, the North Dakota TFFR COLA for 2027 and why there is no automatic COLA, the North Dakota PERS COLA for 2027 and why the main system has none, the New Jersey SPRS COLA for 2027 and the suspension since 2011 and the New Jersey JRS COLA for 2027 and the suspension since 2011.
And more public pension COLAs for 2027, system by system: the Nebraska State Patrol Retirement COLA for 2027 and the 2.5% and 1% caps, the Montana TRS COLA for 2027 and the GABA of 1.5% for Tier 1 and 0.5% for Tier 2, the Montana Sheriffs’ Retirement System COLA for 2027 and the 3% or 1.5% GABA, the Montana MPORS COLA for 2027 and the fixed 3% GABA, the Montana GWPORS COLA for 2027 and the 3% or 1.5% GABA, the Montana FURS COLA for 2027 and the fixed 3% GABA, the Missouri MPERS COLA for 2027 and the 80% of CPI-U rule, the Mississippi Highway Patrol Retirement COLA for 2027 and the 3% formula and the Minnesota TRA COLA for 2027 and the 1.4% fixed by law.
And more public pension COLAs for 2027, system by system: the SDCERA COLA for 2027 and the 2026 maximum, the SBCERA COLA for 2027 and the 2026 vote, the SamCERA COLA for 2027 and the 2026 award, the San Antonio Fire and Police pension COLA for 2027, the Portland FPDR COLA for 2027 and the 2% cap, the Philadelphia pension COLA for 2027 and the adjustment fund, the Middlesex County Retirement COLA for 2027, the Metro Nashville pension COLA for 2027 and the Miami FIPO COLA for 2027 and the dollar table.
And more public pension COLAs for 2027, system by system: the LAFPP COLA for 2027 and Tier 5 and 6, the LACERA COLA for 2027 and the 2026 award, the Kern County KCERA COLA for 2027, the Kansas City public school retirement COLA for 2027, the Kansas City employees retirement COLA for 2027, the Jacksonville Police and Fire pension COLA for 2027, the Jacksonville General Employees COLA for 2027, the Imperial County ICERS COLA for 2027 and the Houston Police pension COLA for 2027.
Estimate a public pension benefit from the system’s printed formula: Utah URS Tier 1 retirement calculator, Virginia VRS Plan 1 retirement calculator, Maryland state pension calculator, Colorado PERA retirement calculator, Washington PERS Plan 2 retirement calculator, Iowa IPERS retirement calculator, Michigan MPSERS MIP retirement calculator, Illinois SERS Tier 1 retirement calculator, Georgia ERS New Plan retirement calculator, Mississippi PERS Tier 4 retirement calculator, Louisiana LASERS Regular retirement calculator and West Virginia PERS retirement calculator for members before 2015.
When a public pension member can retire, system by system: the Pennsylvania SERS retirement age and eligibility rules, the Illinois IMRF retirement age and eligibility rules for Tier 1 and Tier 2, the Ohio Police and Fire retirement age and eligibility rules, the Mississippi PERS retirement age and eligibility rules for Tier 5, the CalPERS retirement age and eligibility rules, the UCRP retirement age and eligibility rules, the Iowa IPERS retirement age, Rule of 88 and eligibility rules, the Florida Retirement System retirement age and eligibility rules, the CalSTRS retirement age and eligibility rules for 2% at 62 members and the NYSLRS retirement age and eligibility rules for Tier 6.
When a public pension member can retire, system by system: the Texas TRS retirement age and eligibility rules for Tier 5, the North Carolina TSERS retirement age and eligibility rules, the Georgia TRS retirement age and eligibility rules, the Illinois TRS retirement age and eligibility rules for Tier 1 and Tier 2, the Kentucky TRS retirement age and eligibility rules for TRS 4, the Michigan MPSERS retirement age and eligibility rules, the Wisconsin WRS retirement age and eligibility rules, the NYSTRS Tier 6 retirement age and eligibility rules, the Virginia VRS retirement age and eligibility rules for the Hybrid plan and Plan 2 and the New Jersey PERS retirement age and eligibility rules by tier.
When a public pension member can retire, system by system: the New Jersey TPAF retirement age and eligibility rules by tier, the Colorado PERA retirement age and eligibility rules for members hired in 2020 or later, the Washington PERS Plan 2 retirement age and eligibility rules, the Minnesota TRA retirement age and eligibility rules, the Minnesota PERA retirement age and eligibility rules for the Coordinated Plan, the Oregon PERS retirement age and eligibility rules for Tier One, Tier Two and OPSRP, the Tennessee TCRS retirement age and eligibility rules for the Hybrid and Legacy plans, the Missouri PSRS and PEERS retirement age and eligibility rules, the Missouri MOSERS retirement age and eligibility rules for MSEP 2011 and the Indiana PERF retirement age and eligibility rules for the Hybrid plan.
When a public pension member can retire, system by system: the Maryland MSRPS retirement age and eligibility rules for the Reformed Contributory Pension Benefit, the Massachusetts MTRS retirement age and eligibility rules for Tier 1 and Tier 2, the Alabama RSA retirement age and eligibility rules for Tier 2 and ERS Tier 1, the South Carolina SCRS retirement age and eligibility rules for Class Three and Class Two, the Louisiana TRSL retirement age and eligibility rules, the Oklahoma OPERS retirement age and eligibility rules by hire date and the Oklahoma TRS retirement age and eligibility rules by join date.
The letter your plan sends every year
Separate from any decision, your plan must send an Annual Funding Notice — due within 120 days after the plan year ends, and required by law to be written so the average participant can understand it. The statute requires three years of the funded percentage side by side, which is the point most readers miss: the trend is the signal, and a single year is close to meaningless.
Related guides
Equity Compensation · Trusts · Roth Conversions · Settling an Estate · Inherited IRA Rules · Business Owner Retirement and Exit · Social Security Timing · Retirement Withdrawals · When a Spouse Dies · Charitable Giving and Tax · Divorce and Your Money · Home Sale Taxes · Life Insurance Decisions · IRMAA · Long-Term Care Planning · Research · All guides