How should my pension affect my retirement planning?
- What is a pension?
- Do I have to do anything to manage my pension?
- What if I leave my company before I retire?
- How does vesting work?
- When can I access my pension money?
- Can I take out a loan from my pension plan?
- Should I take a lump-sum payout or monthly payments?
- What are the advantages of taking a lump sum?
- Should I invest my lump-sum payout in an annuity?
- What's the difference between a single-life annuity and a joint-and-survivor annuity?
- Will I pay tax on my pension payouts?
- How should my pension affect my retirement planning?
- Will having a public-sector pension affect my Social Security?
Your pension should be just one tool in your retirement shed. Chances are, most pensions will not produce enough income to fully cover all your retirement needs, so you should be saving in other accounts as well.
Some employers that offer traditional pensions also offer defined contribution plans, such as 401(k)s and 457 plans, which allow you to sock away more for retirement by setting aside some of your paycheck in a special tax-deferred investment account. If so, consider yourself lucky and sign up - especially if your boss agrees to throw in a matching contribution.
And if you are eligible for a Roth IRA, that is often an unbeatable way to save for retirement. In 2008, individuals with modified adjusted gross income (MAGI) below $101,000 and couples filing a joint tax return with MAGI under $159,000 can make a full $5,000 contribution to a Roth IRA; if you're over 50, you can add another $1,000 to boost your annual contribution limit to $6,000.
