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How much money do you get from a pention

I am not to sure how much you get #money


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Kim’s Answer

Brandon,

There are many variables that go into determining how much a pension is. Stop a minute and think about pensions. Let's say a person works from the age of 25 to the age of 55. That's 30 years. Let's say another person works from the age of 35 to 65. That's also 30 years. Let's say they made exactly the same rate of pay. Their pensions will be different. Why? Because pensions are usually based on actuarial tables - how long each person is expected to live. After all, the pension will pay out for the rest of their lives. So, the first gentleman might be expected to live another 33 years, where as the second gentleman would be expected to live only another 23 years. So that they both receive approximately the same amount of money over their remaining lifetimes, the second individual would have a higher monthly payment.

Pensions are also based on salary. Those making more money get higher pensions. A lot more. Sadly, I've known custodians who were not able to pay their health insurance premiums with their retirement checks.

As you go through life, I encourage you to consult with financial planners, if they are made available to you through your 401K. They can help you to plan. In retirement, you should have multiple income sources. So, one might be your pension if you have one, one could be a 401K or a ROTH IRA account, and one would be your Social Security check. Plus any other savings. If you have all of these put together, retirement can be affordable. You will also want to learn skills about money management: how to borrow money, how to make spending decisions, prioritizing needs over wants, not borrowing except for major purchases, etc. There's a lot to learn, and most of us made a few mistakes along the way.

You are asking really good questions, and it is good to see you thinking about such things at such a young age!

Kim

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