Should you take your pension in monthly payments or should you ask for a lump sum of money? Private employers increasingly offer this choice and that means you will face a tough decision.

Confusion about pension payouts can lead to a financially devastating mistakes, especially for older people who can’t get a do-over. That led the Consumer Financial Protection Bureau (CFPB) to step into the breach. It came up with a guide to help you navigate pension payment choices. 

The guide provides answers about pension payouts and offers tips and warnings to help you protect and manage your money. CFPB Director Richard Cordray said, “Retirees are increasingly being faced with the difficult one-time choice to either take their pension payments in a lump sum or as a lifetime income stream. Clear information about the trade-offs they face can help consumers make the right financial decision for their retirement security.”

When you review your needs, key factors to consider include:

Consider the the length of time you need the income.

A monthly payment option offers steady lifetime income and substantially reduces a consumer’s risk of running out of money later in life. This is especially important if the consumer or their spouse is in good health or if either of the two has a family history of longevity.

With a monthly payment, you have the protection of the Pension Benefit Guaranty Corporation (PBGC). If your company declares bankruptcy or cannot make its pension payments, the PBGC guarantees those payments up to a certain amount. The CFPB says, “Pension payments are also protected against certain creditor claims or debt collectors. With a lump-sum payout, consumers lose these protections.”

In addition, if you choose the monthly payment, your benefit may include a surviving spouse clause.

A lump-sum payout, however, might make sense if you have terminal disease or illness. It also might work for you if you have a steady income stream from another source.

But the CFPB guide reminds that if you take a lump sum you can lose it all unless you have good money management skills  

The lump sum also makes you a target for scammers. And you’ll want to triple check before taking advice from people or making investments with your retirement money.

You can find more on the CFPB website and you can see the guide for figuring out your pension here.