Why Your Pension May Not Be Enough

Pensions are not as straight forward as you may think. Most of us signed up for this career with the thought of a pension being all we needed for retirement. 

Relying On A Government Pension

Local, state, and federal governments provide public sector employees with varying plans depending on age, amount of time in service, and employment levels within a particular field such as public safety. There are complicated formulas to determine precisely how much you can expect to receive in retirement, but often these figures are less than you would expect or require.

Pension Formulas Throughout The United States

If you are outside of New Jersey, you can find your individual state’s pension formula on the National Conference of State Legislatures website. In New Jersey, there are no Social Security benefits to supplement public sector pensions.

Upon retirement, your expenses may and probably will change. However, maybe you downsize your house, or the kids go off to college, making trips to the grocery store less expensive, so stretching your dollar a little thinner doesn’t necessarily worry you.

Don’t Ignore These Retirement Financial Concerns

- Length Of Retirement Is Increasing - Pension Gaps - Health Decline - Personal & Life Changes - Life Always Happens

Save For Retirement By Paying Yourself First

The earlier you save and invest, the larger your nest egg will be when you retire. (Don’t panic if you’re nearing retirement – better late than never when it comes to savings – but earlier is undoubtedly better).

Here are some of the advantages and downfalls with each traditional account type: 

Roth IRA

Growth is tax-deferred, and withdrawals are tax-free upon as long as you are 59 1/2 and have held the account for at least five years. There are no immediate tax-benefits of a Roth IRA.

Traditional IRA

Traditional IRAs can be volatile, are tax-deferred, and fees can be high depending upon the investments within.

An IRA or Roth IRA is not in and of itself an investment. They are simply tax codes. Growth and performance within these account types will vary greatly depending on the assets you hold. 

Mutual Funds

Mutual Funds are subject to loss, they can have high fees & sales charges, but can help you diversify. Growth in a non-qualified account may be eligible for capital gains tax rates.

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