The pursuit of happiness Retirement can be much smoother with a pension.
Retirees receiving steady incomes express greater contentment compared to those who do not. rely on 401(k)s To augment their Social Security benefits, research indicates. Those with pensions find comfort and joy in having a guaranteed lifetime income, they claim.
Although 401(k)s have the potential to create greater riches, retirees mention that managing the various investment, tax, and withdrawal tactics can increase their anxiety precisely when they aim to reduce it.
Pensions come with certain disadvantages. Accumulating a substantial monthly benefit can be challenging unless you remain employed by the same company for many years, and these benefits aren't necessarily updated to account for inflation, according to Gal Wettstein, an economist from Boston College’s Center for Retirement Research. employers go bankrupt He mentioned that benefits could potentially be reduced.
However, as Oscar Wilde put it, "It is better to have a secure source of income than to be captivating." Individuals who enjoy a stable lifestyle supported by their pensions—which include most government employees and about 15% of those working in the private sector, based on data from the U.S. Bureau of Labor Statistics—would likely concur with this sentiment.
Here, four retirees claim that the sacrifices are worthwhile for the sense of security they gain.
Rick Larson's two retirement benefits fully cover all of his current yearly costs.
“The pressure of managing my retirement savings for life doesn’t apply to me,” stated the retired Air Force colonel, as his friends continue to handle theirs indefinitely.”
Every month, he earns an untaxed sum of $8,100 from his military pension and another $800 from his private-sector pension. The military pension adjusts for inflation, whereas the private one does not. Additionally, he gets $4,100 before taxes each month via Social Security, and the military covers healthcare through supplementary insurance alongside Medicare.
Larson allocates approximately $6,000 per month towards ongoing costs and sets aside an additional $7,000 specifically for traveling purposes. His financial obligations include two mortgage payments: one of $2,500 monthly for his residence in Reston, Virginia, and another of $1,200 each month for a vacation property in Myrtle Beach, South Carolina.
When Larson was 77 years old at the time of joining the military during the Vietnam War, he did not intend to turn it into a lifelong profession. Instead of waiting to be conscripted, he enlisted in the Air Force, thinking this would allow him greater say over his duties.
"It felt like flying would be preferable to lugging around an M16 rifle across Southeast Asia," stated Larson, who was fortunately never sent to Vietnam.
After spending several years in the military, Larson thought about transitioning to the private sector. However, the Air Force presented him with an opportunity to work in Japan instead. His wife, Karla, supported the idea and even took up learning Japanese.
The pair relocated 17 times. In 1991, during the Iraq war, they found themselves in Cairo, with Karla teaching there. According to Larson, he worked out arrangements for U.S. aircraft used for mid-air refueling of military planes to operate from an Egyptian Air Force installation.
In the year 2000, he stepped down from his position as a colonel and transitioned into consultancy for a company specializing in defense contracts, focusing on initiatives related to intelligence.
Upon retirement in 2014, the pair embarked on journeys to places such as Australia and New Zealand. In 2022, Karla passed away due to COVID-related issues after visiting Antarctica.
Larson continues his travels, most recently stopping by Florence, Italy, as he visited his granddaughter who was studying there. He is looking forward to embarking on an around-the-world cruise and enjoys going to Kansas City Royals games at various stadiums across the nation.
When at home, Larson joins an 8 a.m. prayer session via Zoom prior to going to the gym. He frequently runs into his two daughters along with their respective families.
He only began contributing to a 401(k) plan once he exited the military at age 53. Since his military pension was sufficient for covering his daily expenses, he maximized his contributions by investing the yearly pretax limit and also set aside post-tax funds which were transferred into a Roth account. As a result, he has accumulated over $1 million.
Larson gives a portion of his mandatory withdrawal to his church and intends to pass along the remainder of his savings to his grandchildren.
"They're just beginning their lives and have to cope with elevated mortgage rates and employment without pension benefits," he stated.
At age 55, Patricia Pekar decided to retire when she discovered that her pension would cover 67% of her salary.
Released from work obligations, she dedicates more of her time to volunteer at her church or rides her motorcycle alongside her spouse across the vast highways.
I enjoy being outdoors," stated Pekar, aged 67. "The solitude and the sounds surrounding me are what I appreciate.
Pekar secured her retirement benefits through years of service—as both a clerk and an attorney—for local and municipal administrations in Ohio over thirty years. Her pension started building up during her time at college when she worked for Dennis Kucinich, Cleveland’s ex-mayor who went on to be elected into Congress.
Following the acquisition of her law degree, she began working for Scioto County in southern Ohio, the place where she resides with her spouse, Wyatt Bates. In this role, she presided over child support proceedings and implemented federal guidelines aimed at increasing contributions from absent parents, which significantly benefited numerous single mothers.
Pekar and Bates, also 67, currently earn about $7,780 a month before taxes, including $5,400 from her inflation-adjusted pension, $750 from her part-time work as a bookkeeper, and $1,635 from his Social Security.
Pekar, who monitors her expenditures closely, mentioned that the pension promotes financial restraint. Her monthly costs consist of $150 for cell phone and internet services, $370 for heating and electricity, and $400 for food purchases.
Bates makes an additional $20,000 annually from his real estate work, covering the pair's traveling expenses and occasional one-off costs like their recently bought second-hand Jeep.
Pekar hasn’t claimed Social Security benefits yet. She is eligible for approximately $850 per month from her work in the private sector. Initially, she was set to receive a reduced benefit. However, the Senate passed a measure on Saturday that repealed this reduction. cutback in Social Security payments For individuals who have public-sector pensions but do not participate in Social Security, President Biden is anticipated to sign this legislation.
The pair has $382,000 in their IRAs and brokerage accounts. Each year they take out $4,000 for long-term care insurance premiums but aim to leave the remainder untouched.
They embark on extensive journeys aboard their Harley-Davidsons, heading for places like the Great Smoky Mountains. In the coming year, they intend to go on two cruise vacations and also participate in a spiritual journey to Lourdes, France, with their congregation.
Bates plays drums for a band that entertains at nearby pubs and eateries. Pekar belongs to four female equestrian groups. Although men are permitted, she explained, they must stay towards the rear of the pack during rides.
There exists a bond among riders," she stated. "This sense of fellowship holds a unique importance.
While pursuing his associate degree at a community college, John Priddy was approached by a non-profit organization responsible for supplying water to over two million residents in central Arizona.
He remained there for the following 43 years.
Priddy's dedication to the Salt River Project was rewarded during retirement with a monthly pension of approximately $4,700 post-tax. Towards the end of his career, he accumulated much of his unused vacation and sick leave, receiving a one-time payout of around $50,000 upon retiring.
Priddy, who is 72 years old, mentioned that he never found the time or felt the necessity for obtaining a bachelor’s degree. He was preoccupied with work and assisting in raising his two children, who are now grown-ups.
"I put in a lot of effort over several years to secure a decent pension, and I'm grateful that everything turned out well," he stated.
Feeling financially secure gave him the courage to explore new opportunities.
At the age of 55, he chose to take up painting. A pastime from years back has now turned into the primary pursuit during his retirement. Within his residence lies an art studio where he delights in capturing images of cars through brushstrokes. Having retired at 63, he dedicates a minimum of three hours daily to this craft. Additionally, he has held key positions within an arts association based in the Phoenix region.
Priddy has consistently been a saver, he mentioned. During his teenage years, his family was once nearly without a home. Since then, he has strived to save as much as he can and maintain frugal spending habits, he explained.
Each year, he allocates approximately $60,000, of which his largest expenditure is his mortgage. The balance on this particular loan stands at around $300,000, carrying an interest rate of 2.99%. This house was purchased two decades earlier following his separation from his spouse. According to him, he sees no urgency in settling the mortgage completely and does not have any additional debts.
Priddy decided to wait until he turned 66 before applying for Social Security benefits, receiving approximately $2,600 each month as a result. Additionally, he has around $850,000 accumulated in an untouched retirement fund that is primarily allocated to stock investments.
Every weekday morning, he rises at 5 a.m., makes his way to the gym for an exercise session lasting 40 minutes, then returns home to whip up a nutritious meal consisting of no fewer than three eggs and protein-dense bread. Most dishes he prepares himself, often inviting fellow gym-goers over for live tutorials on crafting wholesome recipes.
“I'm busier than ever,” stated Priddy.
During his 25-year tenure with the state of California, Ken Thompson wasn't fond of most of the positions he held.
However, the 71-year-old achieved what they desired.
"I put in all this work so I could have a pension someday," stated Thompson upon retiring at the age of 64.
He earns more each month at home now compared to when he was employed. Thompson receives approximately $5,900 per month from his pension post-taxes, supplemented by an additional $2,200 monthly through Social Security benefits. Furthermore, he has accumulated savings worth $110,000 which are currently allocated across various investments including stocks, money-market funds, and CDs.
Although he hasn't increased his expenditures, he and his spouse still allocate roughly $3,400 monthly, with the bulk of this sum going towards their home loan.
Over the last few years, extra funds remaining at the close of each month were utilized to settle various debts such as those from credit cards and auto loans, or they went towards refurbishing their house. Currently, apart from their mortgage, they have cleared all their obligations. Nowadays, Thompson usually channels any additional earnings into a savings account.
Initially, when Thompson began his career, he worked for several transportation firms. He dedicated almost ten years to one firm where he was led to believe there would be a retirement pension waiting for him. However, once the business folded, the pension—he mentioned it might have been valued around a couple thousand dollars—disappeared as well.
That was when he opted for a career with the government, primarily focusing on information security.
He feels secure with his pension, but their monthly grocery costs are eroding that comfort, he mentioned. Prior to the pandemic, he could purchase groceries for both of them for around $150 per week. Nowadays, he spends nearly $300 weekly on groceries. The Thompsons meticulously monitor their expenditures and have reduced the indulgences they once enjoyed. Rather than purchasing two rib-eye steaks for dinner like they did pre-pandemic, they now share just one steak.
“He mentioned that we are expending more resources but receiving less in return.”
Fighting cancer over the past decade took a toll on his health, he admitted. Although he is currently free from cancer, he experiences some issues with balancing himself due to his illness. He expressed gratitude that most of his medical expenses not covered by Medicare are mostly taken care of by the state assistance, he noted.
He has some limitations when it comes to physical activities, yet he can still manage to walk his dog several times weekly throughout the neighborhood. Reading and staying updated with business and political developments are among his favorite pastimes.
"I'm simply delighted that I no longer have to work," he stated.
Send the letter to Veronica Dagher Veronica.Dagher@wsj.com and Anne Tergesen at anne.tergesen@wsj.com
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