Retirement Income Guide

Integrate Your Pension with Your Retirement Savings

Integrate Your Pension with Your Retirement Savings

Balancing your savings and pensions in retirement against your expenses can be tricky. Here are some tips to help you manage your savings alongside your pension for monthly income.

Stephanie Faris

Published September 9th, 2021

Table of Contents

Key Takeaways

  • Pensions give you a predictable monthly income that can combine well with your Social Security payments.
  • As with Social Security, though, you’ll likely have to supplement your pension with some of your retirement savings.
  • The smaller the amount you take out of your savings each month, the better, and integrating your pension with your retirement savings can help.

When you retire, you’ll shift from that regular paycheck to retirement income. Ideally, you’ll have set aside some funds that you can live on, but that won’t be your only source of income. You’ll also have Social Security, as well as any pensions you’ve earned through your years of hard work.

But balancing your savings and pensions in retirement against your expenses can be tricky. Integrating your pension with your retirement savings can help you budget, since it simulates the income you received when you were on a company’s payroll. Here are some tips to help you combine your savings and pension for a monthly income.

Integrate Your Pension with Your Retirement Savings

Not everyone will receive a pension when they retire. Although most government employees are signed up for one, only 12 percent of private sector employees have access to employer-provided pensions. Even if you’re in line for a pension, though, it’s still important to have some savings prepared, as well.

Once you’re ready to retire, combining your pensions and retirement savings can help you generate a monthly income that makes it easy to budget. When mixed with your Social Security payments, you’ll be able to know exactly how much you can comfortably spend each month.

Why is it Important to Balance Your Retirement Plan

Retirees who receive a pension have guaranteed monthly income in the form of pensions and, in most cases, Social Security payments. Those will last throughout the duration of your retirement, so you won’t have to worry about money.

But your retirement savings does have a limit. By balancing your retirement plan types, you’ll be able to stretch that savings out over the years, ensuring you have all your expenses covered from now until the day you die.

Utilizing Retirement Accounts & Emergency Funds

Emergencies don’t end after you retire. In fact, it’s even more important that you have an emergency fund that you can draw from in retirement.

When combining your pension and retirement fund, make sure you build in a little extra cushion to keep a decent emergency fund. Consider expenses like car repairs, uncovered healthcare costs, and home maintenance. If you can leave a little extra in your retirement savings to take care of things, you’ll sleep much easier.

Using Pensions & Retirement Accounts to Effectively Manage Your Retirement Plan

One of the best things about balancing your pensions and retirement accounts is that you can possibly use the combination to delay taking Social Security. If you can wait until the age of 70, you’ll get 132 percent of the monthly benefit, which is the maximum monthly payout you can receive.

But whatever you do, it will always be important to maintain a monthly budget. This will help ensure you remain in control of your money rather than letting it control you. If you have a pension, you also might have a little extra cushion for putting some money into low-risk investments, and those investments can pay dividends later, upping your monthly income further.

Final Thoughts

In retirement, making your dollars stretch will be top priority. If you can create a reliable monthly income, similar to what you had while in the workforce, you’ll enjoy the peace of mind of knowing your retirement savings will last. We recommend working with a certified financial planner who can look at your combined monthly income and recommend ways to make those dollars stretch.

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Stephanie Faris

Stephanie Faris has written about finance for entrepreneurs and marketing firms since 2013. She spent nearly a year as a writer for a credit card processing service and has written about finance for numerous marketing firms and entrepreneurs. Her work has appeared on Money Under 30, The Motley Fool, MoneyGeek, E-commerce Insiders, and GoBankingRates.

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