Today's Hack

Do you have a pension? If so, what does that mean when it comes to planning for your retirement? Let’s talk about this traditional retirement income source and what it means for planning

Other Retirement Facts:

While pensions used to be the standard retirement benefit offered by companies, that is becoming less and less common. On today’s episode of the podcast, Phil talks about what options you have with a pension, why you might still need to save for retirement outside of the pension, and what to look out for.

As companies have shifted toward other retirement savings options, fewer people still have a pension plan. If you’re a state employee, government employee, or perhaps in the auto industry however, you might have a pension. Otherwise, many companies have shifted toward things like 401(k)s, meaning employees have to self-save for retirement.

If someone has a pension, do they have an advantage in retirement? While it helps remove some of the risk, don’t assume you’re automatically in great shape when it comes to retirement savings. Remember that your pension is likely fixed, so be sure to plan for inflation.

If you’re offered a lump sum vs. a monthly payment, should you go with the lump sum? What are the pros and cons? What happens if the business fails? Be sure to run the numbers by an advisor before you make your decision. You want to see what will ultimately make more sense for you. If you’re wanting a guaranteed monthly amount, there are other ways to create that financial consistency with your financial plan even if you do take the lump sum.

Do you have a plan when it comes to your pension? Does it include a tax strategy as well? Make sure to meet with an advisor you trust to get all the information you need when it comes to your pension as a part of your bigger financial plan.

Listen to the entire episode or click on the timestamps below to skip ahead to a particular element regarding pensions.

0:48 – Michigan is known for still having a lot of pension plans.

2:31 – There’s more pressure on self-saving for retirement.

3:35 – If someone has a pension, do they have an advantage in retirement?

6:01 – Should you take a lump sum or monthly payment?

9:43 – How has COVID changed company loyalty?

11:38 – How do you address inflation and taxes? 

Thanks for listening! We’ll be back with another episode next week.

A Quotable Moment:

The ‘invention’ of the 401(k) was for that main reason–companies started to realize years ago that being in the pension business isn’t our core business, so they started to shift some of that risk toward employees,

-Phil Putney

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