How Much Should I Invest If I Have a Pension?

How Much Should I Invest If I Have a Pension?

Bring confidence to your wealth building with simplified strategies from The Money Guy. Learn how to apply financial tactics that go beyond common sense and help you reach your money goals faster. Make your assets do the heavy lifting so you can quit worrying and start living a more fulfilled life.

[MargaretWest-mu]

In the 1990s, I sold pensions based on the promise that a tax-free lump sum would cover most, if not all, of the mortgage and still leave the investor with a lifelong pension. This strategy was common, often involving terms of 40 years or more.

[robertbarnes]

I retired from the Federal Government last year (2022) at age 62. In multiplying my $36, 700 per year retirement pension time 25 years, I determined the value of my pension to be over $900, 000. I had a little over $800, 000 in my TSP. Home is paid off and so is our 2021 Lexus with low mileage. Car will last many years given Lexus reliability. With zero debt, the pension allowed us to EASILY retire with ZERO concerns. Having that federal pension is bulletproof and provides $900, 000 of income I didn’t have to save in my TSP. We sleep well knowing we are in great shape.

[mariadrukker]

People are facing a tough retirement. and it's even harder for workers to save due to low-paying jobs, inflation, and high rents. Now, middle-class Americans find it tough to own a home too, leaving them without a place to retire in.

[AJtheone]

Active duty soldier here, 10.5 years in. I have a Roth IRA, roth Tsp, and I’ll have my pension at 39. I’m also completely debt free, life is already smooth sailing. I’m personally aiming for that barista-fire lifestyle after I retire from the military 🤙🏼

[joenotarantonio]

Firefighter/EMT from RI here. I help new hires understand our retirement benefits and how to save for retirement. I constantly refer to your videos and send people to your YouTube channel. Needless to say, I will be adding this video into the mix. Thank you!

[dforrest]

Great video! I just retired as a teacher with a pension. If I’d waited four years I could have retired with a full pension, which would be more than I’d ever spend (I’ve always lived below my means). However, teaching at my school has been remarkably stressful the past few years, and not good for my mental or physical health. Saving aggressively allowed me to take the earliest possible retirement (with subsidized health care) at 55 with no worries about financial independence despite the pension reduced by over 30%. I’ll actually teaching part-time at a much smaller private school next year, but it’s out of choice, not necessity. Saving extra gave me a lot of freedom to choose my path.

[flrbase]

As a teacher who contributed 7% to my pension, i found it difficult to contribute to a 403B which had no matching. I retired at 59, with about 100k with no debt and I'm totally satisfied with my lifestyle post retirement

[mistyhoffman]

Finally they talk about people with pensions I'm so confused if I'm behind or ahead with one.

[kzalaska]

I'm a Fire Fighter/Paramedic from Alaska. I always saved so that I could be OK if my pension failed. This allowed me to retire three years early when I started to notice the affects of aging on my mind and body instead of having to stay longer. I still earned a pension, obviously less than if I had stayed the three years, and I'll have to pay for my own medical insurance for six years where it would have been provided from the start if I had waited. Having the ability to leave to safeguard my own health has been a blessing.

[resterAnonyme]

Less than a year before I retired from the Air Force I was med boarded, which means they would evaluate me and determine if I could continue in the Air Force because of a medical condition. Because I had an approved retirement date they ended up canceling the med board. The questionnaire may have the intent of retiring, but until you are actually retired and receiving that pension nothing is guaranteed.

[Melanie]

I have a pension but I also have a TSP, a Roth IRA, and a taxable brokerage…the taxable brokerage exists to support my lifestyle once I retire from active duty after 30 years.

[michelleadams]

My dad had two pensions with the union and never invested. He has been drawing from it for almost 20 years with no plans on retiring. At 80, he is still working in the same field and loves it.

[Flaccid_Banana]

I have a pension, a SERP, and a 457 through my employer and I have a Roth IRA on my own. I’m 24 and hoping to retire early :)

[rockystaatz]

Some people realize that sometimes funds/pensions aren’t ran correctly and have problems, so you should have more money set aside in something else

[markobasi]

I Lock in a 40% pension in 5 years (20 years on the job). Plan to walk away at 27 years in the job at 71%, ill be 50 years old. Maxing out the roth to make me whole 100+%.

[cameroncunningham]

I am a federal employee and when I retire I will be entitled to to a pension, however I still aggressively save in the TSP and my own personal IRA,

Operate as though the pension doesn’t exist and plan for the possibility of fully funding your own retirement

Nothing is guaranteed

[bblauter]

I know this video does not apply to many subscribers since few people have private sector Pensions, so I want to thank you for making it.
I didn't even realize my position of 10 years had one until recently. I've very curious how the company pension will pan out.

[cjlossp]

I worked for a company that got sold. The people in their early 50s lost 60% of what they were expecting for pension. And some were relying on it. I was young enough that It didn't change my retirement journey. That was a learning lesson for me, to never rely on a pension. This was in the private sector.

[CheJoffre]

Love when you all feature a question from Military/Federal Employee subscribers! As you mentioned, we don't know what the future holds, as far as taxes, etc. For example, I believe this past year there was talk about changing how VA disability will be taxed. Which would be a huge game changer for many of the Veterans I know. The one thing I've learned from focusing on the percentage rate of gross income invested, is that the higher the percentage the more you learn to live with less. When the time comes to leave the workforce, the higher your savings percentage the less you'll have to fill the gap with your investment income. For example, if we use the 4% rule, $30K a year would need a $750K portfolio, and $40K would need $1M (if I'm calculating it correctly)...$250K extra is what he would to have had to accumulate to sustain that $10K increased lifestyle. Obviously a lot of other variables go into it. It's tough to predict the future, but if you think your sources of income will be a Military pension; VA disability (possibly); Social Security; TSP/IRA's; and non retirement brokerage accounts, the individual is miles ahead of the average Soldier who spends every dollar, doesn't invest, and goes into debt for a fancy car. But yes, stick with 25% of gross income, IMHO! :)

[kadirolek]

Ill sum this up for ya. You need to save as if that pension will never be there. That way if it is you can swim in your bath tub full of money. If its not you can still swim in your bathtub full of money. Also having a solid backup keeps you from getting trapped at a toxic job for a pension. It frees you up a lot if your not dependant on that.