| But here's what the choice really comes down to. If I took the lump sum, what rate of return would I need to generate $266.89 a month of income (the monthly amount of the annuity)? That is equivalent to $3,202.68 per year, which is 5.8% of $55,007.02. In other words, if I can earn 5.8% per year on the lump sum, I will generate the equivalent monthly income that I would if I accepted the monthly annuity. At the same time, I would be preserving that lump sum. With the annuities, when the payments stop, there is nothing left. Let's consider an intermediate case. Let's say I earn 3% annually on that lump sum. That would be $1650.21 in the first year. Now, let's say I want to maintain the previous annual income of $3,202.68 by withdrawing the return plus part of the principal. In this case, the principal will go down every year as I supplement the return. This is a more complex situation, but it's essentially the inverse of a mortgage calculation. The $55,000 monthly annuity would reach a zero balance just after my 77th birthday. I would have been paid a total of $77,655. In fact, I ran one more case to see how high my return must be for the lump sum to last until my 80th birthday. That happens to be 3.6%. Consequently, 3.6% is an important number. If I can earn a higher average annual return than this, by my 80th birthday I will be better off taking the lump sum. If I am not confident that I can, then I am better off taking annuity payments. But it also tells me that it would be a mistake in the long run to take the lump sum and invest in any fixed income choice paying less than 3.6%. There are risks and considerations either way. If I didn't think I would live very long, the lump sum makes the most sense. If I think I would live a long life, the lump sum makes the most sense if the returns are high enough. What constitutes "high enough" would depend on how long I live - an unknown variable. If I could use the lump sum to buy U.S. Treasury Bonds that yield 4%, my decision would be a no-brainer. The downside risk would be near zero. I would immediately receive the $55,000, so if something happened to me in the short-term, my beneficiaries would still get the money. In the longer term, a safe 4% return would allow me to withdraw $3,202.68 monthly until past my 82nd birthday. But there aren't any risk-free investments that yield 4% or better. I must balance risk and reward. This depends on how much I will depend on the income. In my case, I can afford to take a bit more risk. However, I also don't want to put all my eggs in one basket. There are investment vehicles that pay yields in the 6% to 8% range. For example, one of my favorite master limited partnerships (MLPs) is Enviva Partners LP (NYSE: EVA). The company makes wood pellets primarily for the European market. EVA yields 8.2%, which would generate 41% more income than the annuity payout. But if for some unforeseen reason the company went bankrupt, there goes my pension. I can't risk that. My Decision Since this income isn't critical to my retirement, I decided I could accept a bit more risk. But I wanted a managed fund, to make sure that risks were being managed as the business cycle changes. I selected the Vanguard LifeStrategy Growth Fund (VASGX). I like Vanguard funds because their expenses are extremely low. This particular fund consists of 20% bonds, about 50% domestic stocks, and about 30% international stocks. Since its 1994 inception, the fund has returned an annual average of 8.03%. Over the past 10 years, the annual average return was 10.51%. Of course, past performance is no guarantee of future performance, but 8.03% would enable me to have more income from the lump sum over time, and/or grow it into a larger sum. If I didn't withdraw anything and returned 8% per year, in 12 years (when I turn 65) the $55,007.02 lump sum will have grown to $144,000. I am accepting a downside risk that could see this fund pull back by 20%-30% in a bear market. If you are depending on this income for your retirement - especially if you will need it within the next five years - then under no circumstances should you risk this much downside. If that is your situation, find yourself a fund with a greater percentage of bonds, which would reduce your downside risk. In any case, when presented with this sort of option, be sure to do the math. Or consult with a financial adviser who can help. Otherwise, you risk costing yourself a lot of money over time. But maybe you seek to turbocharge your retirement savings and you can afford to shoulder a little extra risk, in return for market-thumping gains. Look to the marijuana industry. Increasing numbers of states are legalizing marijuana for medicinal as well as recreational use. The result has been a "green rush" of investors and venture capitalists eager to reap profits from the rise of canna-businesses. 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