Chapter 15

Understanding Pensions


Bullet Understanding who gets a pension

Bullet Grasping the different types of pensions

Bullet Tracking and rolling over your pension

Bullet Getting the most from your pension in retirement

Pensions formed the core of retirement plans in the 1950s and 1960s. You’d get a job with a big company or governmental body in what was practically a lifelong bond. You gave 30 or more of your most productive years, and in exchange, the company or government would promise to provide for you — and perhaps your spouse — for the rest of your life.

More than 85 percent of state and local government workers are offered pensions and 77 percent of workers participate in these plans, says the Bureau of Labor Statistics ( But if you work for a private employer, only 17 percent of workers are offered a pension and just 13 percent participate in them.

If you’re lucky enough to get one, a pension can be a large and important part of your retirement plan. A pension is a defined benefit plan, which means you know what you’re ...

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