Introduction
When planning for retirement, you may want to know how to obtain a pension. There are two main ways to secure a pension: finding a job that offers a pension plan for employees or figuring out a way to create your own pension system.
What is a Pension?
A pension is a guaranteed retirement income source provided by an employer to individuals who meet the eligibility requirements for these benefits. To qualify for a pension benefit, you typically have to work with the employer for a specified number of years, which can vary from person to person.
Getting a Pension Through an Employer
To obtain a pension, you can work for an organization that offers pension benefits and stay with them until you become eligible.
Many federal and state government jobs offer pension benefits. Some examples of these jobs include positions in the military, police, and fire and rescue departments. However, some states may have stopped offering pension plans to new employees.
Large private companies may also offer pension benefits, but this is not as common as it used to be. You should inquire with a potential employer whether they offer a pension plan and what you need to do to qualify for it.
It is important to note that 401(k) benefits are not the same as a pension. With a 401(k), you must contribute your own money to the plan, and the employer may match contributions and/or provide profit-sharing contributions. With a 401(k), you are responsible for the decisions regarding the funds within the plan. If your employer offers a 401(k) instead of a pension plan, one option is to use your 401(k) funds to create your own pension benefit when you retire.
Creating Your Own Pension Plan
When you retire, you can use your savings, such as funds in a 401(k) or IRA, or savings not in a retirement plan, to purchase an immediate annuity that pays you guaranteed income for the rest of your life. In this way, you can create your own pension system.
Postponing the start date for receiving Social Security benefits can also be a way for you to create a larger stream of retirement income. For example, if you retire at age 66, you might use your savings to purchase an annuity that provides guaranteed income for four years. You can then start receiving your Social Security benefits at age 70, which will pay a much larger amount than if you had started receiving them at age 66. This is because your Social Security contributions will continue to grow, by about 8% each year, until you turn 70.
In addition to the amount you have accumulated in your Social Security account, the benefit is also determined based on life expectancy. Therefore, the older you are when you start receiving Social Security, the more valuable the payment will be.
Retirement and Your Spouse
If you are married, you should consider your spouse when making retirement decisions, whether you are obtaining a pension through your employer or creating your own pension plan.
You can choose whether your pension will pay a lifetime benefit just for you, or you may select a survivor option that will pay a monthly amount for the lifetime of either you or your spouse.
There are many options available to you when planning for retirement, and a pension is just one of those options. If you want to learn more about the opportunities available to you, it is wise to consult a financial planner for assistance.
Source: https://www.thebalancemoney.com/how-do-i-get-a-pension-2388814
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