Dividend investing is often seen as a safer way to generate passive income, especially compared to high-growth but volatile stocks. Funds like Schwab U.S. Dividend Equity ETF (NYSE:SCHD), JPMorgan Equity Premium Income ETF (NYSE:JEPI)​, or JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ:JEPQ)​ offer yields between 4% and 10%, meaning a $230,000 investment could theoretically produce around $766 to $1,900 per month.

Many investors, when approaching retirement, start to consider balancing their portfolios so there’s a mix of security and growth, with more emphasis on security. But what happens when that retirement stability is threatened by something you have no control over even before you can create it?

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A 45-year-old investor is facing this exact difficulty: he has a tax-free payout coming with the option to take a $230,000 lump sum now or secure a pension of $800 per month, which would be indexed to inflation for life. He is considering taking a good part of the sum and investing it into assets that generate dividends but is wondering whether there are investments that will pay him the same sum the pension would.

“If I take $200,000 of that and shove it into mostly stuff that pays a dividend? How likely is it to produce as much as the fixed amount or more? I'm worried that I'll lock my money away and only end up getting a few hundred per month; I really need the dividend to help supplement my income,” he wrote on Reddit.

Reddit's finance-savvy commenters have jumped to the comment section to offer their recommendations and pieces of advice for the investor, so let’s see what they suggest.

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$230K Lump Sum Vs. Lifetime Pension: Reddit’s Finance-Savvy Commenters Weigh In

Take the Lump Sum

Many Redditors argued that taking the lump sum offers flexibility, whether for higher returns, legacy planning, or inflation protection.

“The value of cash in hand now is more valuable than the promise of cash in the future. If you’re ok with taking a little more active role in managing it, I’d say take the lump sum. Easily doable to earn +5% returns on it. Plus, whatever you don’t need you can reinvest and let it compound to grow it even faster,” a commenter advised.

Highlighting inflation risk, this Redditor also suggested the poster takes the lump sum: “At a 3% inflation rate, cash loses half its value in 24 years (rule of 72 – dividend 72 by the rate of inflation). The smart money takes the lump sum every time.”

A Redditor shared his real-life success story that started in a very similar way to the poster’s, saying that he took the lump sum, invested it, and is now enjoying $1,700 in dividend income, and has also seen principal growth.

“I was faced with a very similar scenario in life about 10 years ago. Had $200,000 coming as a lump sum or take $780 per month for life. After doing some math it was a no-brainer I took the money. After investing the money I was able to realize $800 a month in income at that time. The principal grew in addition to the income, and today in 2025 I have $1,700 a month in income from the same principal. Plus, the principal grew to over $360,000,” he shared.

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Dividend ETFs and Bonds Can Match or Exceed the Pension

Several commenters argued that a well-structured dividend portfolio could outperform the $800 per month pension, especially with current bond yields and high-dividend ETFs.

“If you take the $230,000 in lump sum and bury it in your backyard, you would be able to take $800 a month for just shy of 24 years. That’s without investing in anything. That puts you at 69 years old. If you invest it in some super safe bonds at 3%, take $800 a month and you will have ~$97,000 at the end of 30 years. Puts you at 75 years old. If you step up the risk and invest part of the money in dividend growth stocks as well as some bonds, then the probability goes up for either increasing the monthly withdrawals down the road or having more left when you pass,” a Redditor wrote.

Replying to the above comment, this user suggested that bonds alone could beat the pension: “I like that you put it out there like that for him. However, one thing I would like to point out, 4.625% is the 30-year bond rate right now. So that is $10,637.50 a year or $886.45 a month and still leaves you with the $230,000 at the end of it.”

“Take the $230,000 and put it in a dividend ETF that pays 4% to 5%. That’s $750 to $950/month-ish,” a Redditor said.

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This article Retirement Nightmare? 45-Year-Old Weighs $230K Lump Sum Vs. Lifetime Pension – 'Are Dividends A Good Idea For Me?' Reddit Reacts originally appeared on Benzinga.com

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