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LEARN MORE ABOUT: Retirement Pension Plans
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Retirement Planning Tips With A Pension
Retirement planning can be a daunting process, but with the right information and strategies, it can be manageable. For individuals with a pension, there are specific considerations and tips that can help ensure a comfortable and secure retirement.
Understand Your Pension
The first step in retirement planning with a pension is to fully understand the details of your pension plan. This includes knowing the vesting schedule, retirement age, and any other specific requirements or rules associated with your pension. It’s also important to familiarize yourself with the options for receiving your pension benefits, such as lump sum payments or annuities.
Maximize Your Pension Benefits
In order to maximize your pension benefits, it’s crucial to take advantage of any opportunities for additional contributions or growth. Some pension plans allow for voluntary contributions or catch-up contributions for those nearing retirement. This can help boost the overall value of your pension and provide a more substantial income in retirement.
Diversify Your Retirement Savings
While a pension can provide a reliable source of income in retirement, it’s important not to rely solely on this benefit. Diversifying your retirement savings through additional investments, such as 401(k) accounts, IRAs, or other retirement vehicles, can provide added security and flexibility in retirement.
Consider Early Retirement
Some pension plans offer early retirement options for individuals who wish to stop working before the standard retirement age. It’s important to carefully consider the implications of early retirement, including any reduction in benefits or potential penalties for early withdrawal. However, for those who are able to afford it, early retirement can provide the opportunity to enjoy more years of leisure and relaxation.
Plan for Healthcare Costs
Healthcare costs can be a significant expense in retirement, so it’s important to factor this into your retirement planning. With a pension, it’s essential to understand your options for healthcare coverage and any associated costs. This may include exploring Medicare options, supplemental insurance, or employer-sponsored healthcare benefits.
Create a Budget and Financial Plan
As you approach retirement, it’s essential to create a budget and financial plan that takes into account your pension benefits, Social Security, and any other sources of income. This can help ensure that you are able to live comfortably within your means and cover all necessary expenses in retirement.
Seek Professional Advice
Retirement planning with a pension can be complex, so it’s wise to seek the advice of a financial advisor or retirement planning professional. They can help you navigate the specifics of your pension plan, as well as provide guidance on other aspects of retirement planning, such as estate planning, tax strategies, and investment options.
By following these retirement planning tips, individuals with a pension can feel more confident and prepared for their retirement years. With careful consideration and strategic planning, it’s possible to achieve a secure and fulfilling retirement lifestyle.
I've been grappling with the same dilemma recently. The 401(k) does seem tempting, especially with the possibility of employer contributions, but I'm concerned about the limited investment options compared to an IRA.
If you retire early while in your 50s, you will need to put enough into your regular stock & bond accounts so you have something to live off without any early withdrawal penalties. Ditto if you plan on waiting till 67 to start Social Security.
It's amazing to see AMC doing well after all the doomsday analyses from naysayers. The stock market is a device for transferring money from the impatient to the patient – warren buffet. It's good to remind people of this right now; you buy on fear and sell on greed or just hold through it all for the long term. It’s easy but lots of people forget.
what about comparing lump sum vs monthly payments
Union Labor
Any thoughts on Railroad retirement pension?
Something that needs to be addressed is Government pensions. Defined Benifit pensions are rare in the private sector, and a pension with a COLA is non-existent in the private sector.. so it's really unsustainable to provide Government workers with far far greater compensation than the taxpayers…. especially since the majority of American's don't pay Federal Income Tax.
Thanks for talking about a 457 Plan. Most, if any financial channels never mention it. More videos on how to maximize your pension! Thanks……..
The best way to avoid taxes is to not save for retirement. However, if you did save in your 401K, then you will get more than when someone did not save anything. The taxes are progressive, so sure if you make more, they will take more, but you still have the same tax rates at the lower income levels, and if everything worked well, the tax will hit only 24% after you and your spouse earn more than 190,000 after all of your deductions. Not many Americans have this problem of paying the 24% tax rate and that is only for the stuff beyond $190K. So don't worry about it because for 90% of Americans, it won't be a problem.
Those with pensions coming, do your calculations on Break Even points to help decide when to start your withdrawals. In our case, it made total sense to take it at the earliest age because the break even point was over 20 plus years out! Each year I delayed, the break even point was even further out . Made absolute no sense to wait.
In my taxable account I went into dividend investing route. In my Roth I did the buy and hold route with an S&P 500 etf and total market etf along with some Berkshire B stock and SCHD.
I retired with a decent pension and never put a cent into an IRA or 401K. I just saved the money. Consequently I don't have to worry about RMDs.
Fewer workers still have pensions. I am lucky to have retired at 56 with a full pension (along with a bit in a 401K), so this info is greatly appreciated.
Where were you 20 years ago with the advice on the Roth 20 years ago? Lol. It is good advice. I opened a Roth 8 years ago and funded it here and there while stacking money in my 457. Now with my Pension and various investments I am just shy of the 22% tax bracket. A small win, I had about 9k of room in the 12% bracket this year because of the Trump tax cuts so I took a 9k disbursement and put it in my Roth. Thanks for passing on the information.
If you really don't need to make withdrawals from your non-pension accounts to fund your retirement, when it becomes necessary to make RMD's then donate the amount to a charity of your choice and it will not be taxable income (it won't be a deduction either, but you can't have it both ways.)
Good video. Thanks
I'm less than two years from 100% Replacement Income from my Pensions. I'll be 63, but without Health Insurance. So, I either need to keep working until 65 & Medicare Eligible… Or Travel Internationally for at least two years. I choose travel .Travel Medical Insurance is about the same as my share of Premium Costs. SE Asian Medical Cost run less than 15% of US. The Philippines runs about 8% of US costs for comparable services. Basing myself in the Philippines & traveling to other Asian destinations as funds allow makes sense to me. At 65 I can return to the US, if I haven't acclimated. Downsides: The Philippines is a Developing Country, with areas of abject poverty. Upsides: Skill Nursing runs less than 25% of US Costs. Meds CASH PRICE are less than most plans CoPays.
Finally! Thank you for having my content for those of us that will be getting pensions! Great content!
When I retire from my career in local government, my hubby and I discussed me taking my full pension and maybe we purchase a term life insurance policy? We’ll both have pensions but mine will be more than his. We were thinking that we could do a first die policy so in the event of our death, we’d be kept financially whole. Any advice or other recommendations? We are debt free and will be renting (we sold our house recently) with no plans to own a home. We have a good amount of liquidity as well.
I have a pension, and I use it to cover monthly expenses. Major expenses such as a new car, big trip, etc. would come from savings. It’s so nice to have a constant monthly income and not worry about where to do withdrawals, etc. I’m not a fan of annuities, but if I didn’t have my pension I’d seriously consider one for an amount similar to my pension.
Got a chuckle on your list of 4 things folks commonly want to do in retirement — big trip, new car, home repairs or "just relocate" — as if that last is a kinda minor thing. My wife and I have been trying/planning to "just relocate" for two years but the two historically worst years in US real estate (and now no better). It remains a goal of ours but it ain't just a "just"! Dollars and effort required!
Planning on retiring next year, my pension will be around 3 k per month
Thanks for the graphic on pensions. I have that tax problem looming and the graphic demonstrates my need to either do some conversions or spend the pre-tax first before ever drawing SS. Fortunately our pre-tax accounts are not the bulk of our savings.
Great Topic, Erik! Thanks for the discussion!!
Great thoughts! The year I almost over and very glad about the decisions I have made so far. Investing in the market earlier this year regardless of the market condition has saved my life. I made over 70k USD with a start of 25k in the last 7 months. I know it’s nothing compared to what others make but I’m glad I’m changing my finances. If things keep going well I might retire soon>.
Wife and I both have a pension which itself should cover most core expenses. Social Security should put us at a $1,000+ surplus income (for a modest lifestyle). Saving in a Roth IRA for added flexibility. Goal is to max Roth yearly, probably won’t happen for a few years.
Thanks Eric great advice!!