Psst! Wanna Sell Your Pension?

Here's an idea you should run, not walk, away from: selling your pension to third-parties in exchange for a cash advance. These schemes are cropping up more and more lately, so much so that Finra, the self-regulator of the brokerage industry, and the Securities and Exchange Commission and a few state regulators, including those in New York and Massachusetts, have issued alerts about them.

Here's how they work: Suppose you need cash and are drawing a pension. Cash settlement firms will offer you a discounted cash amount (and that's likely a HUGE discount) against the future value of the pension payments. Military veterans seem to be a particular target. Why? Because generally you can retire after 20 years of service and likely will draw benefits for many years -- a huge win for the entity offering you the cash lump sum. For example, let's say you're entitled to a $2,000 a month pension. That's $720,000 over 30 years, not an unlikely scenario, hence the interest in offering you a lot less to make that kind of money.