Q: I received the option to take a lump sum, a monthly annuity payment or wait until I'm 65 to take the monthly payment. What would you suggest if I do not need the money right now?

A: There isn't an easy, straightforward answer to your question. Instead, I want to offer a framework for thinking through the trade-offs involved in deciding on a reasoned course of action. "Considerations in making this decision should include adequacy of other resources, the expected life expectancy of the individual, the credit quality of the annuity provider, inflation, income tax and the financial needs of his or her family," says Julie Krieger, partner and co-manager of the Minneapolis office of Evercore Wealth Management. Let me elaborate a bit on her insight.

In essence, the annuity options offer reassurance of a steady income during retirement that you can't outlive. The lump sum choice gives you flexibility and control over the money. With an annuity, you get an income for the rest of your life (and your surviving spouse if you choose the joint-survivor clause). However, in many cases (although not all) there is nothing left to pass on to heirs. With the lump sum, it's your money. You control it. You can spend it, save it, invest it and leave what's left to your children and favorite charities. The lump sum can be rolled into an IRA, deferring income taxes until the money is withdrawn. The annuity is taxable income each year it's received.

Your wealth is an important consideration. The lump sum is the most popular choice among the well-heeled, people with plenty of assets outside their retirement savings plan to fund their standard of living in retirement. The bigger financial issue for them is how best to transfer wealth and resources to children and charitable causes.

Longevity risk is another factor to think about. You don't really know how long you'll live but you can make an educated guess. If you're healthy and you come from a family with long lives, the annuity becomes more attractive. You don't want to outlive your savings and the annuity is a hedge against that risk. On the other hand, if you aren't healthy and your family has a history of early death the lump sum is a sensible choice.

Another consideration is market risk or, more accurately, market psychology. With the annuity you get a monthly income. It's like a paycheck. You don't have to manage the money or hire a professional to do it for you. The gyrations in the market don't really affect you. The lump sum allows you or a professional to manage the money. How comfortable are you with exposure to the market?

If the annuity doesn't have cost of living adjustment, inflation will erode its purchasing power with time. With the lump sum you could invest some of the money in securities that protect against the ravages of inflation, such as Treasury Inflation Protected Securities, or TIPS. Check the credit rating of the annuity provider. You want a financial company with a healthy balance sheet and a long history.

These are some of the issues to consider before making a choice. As you can see, the route toward answering your question really lies with placing the plan into a larger personal finance context. I don't think one choice is preferable over the other. It all depends on the trade-offs that work best for you.

Chris Farrell is economics editor for "Marketplace Money." His e-mail is cfarrell@mpr.org.