How Do I Get a Pension?

Having a pension is good for your retirement.

Man with a pension springing into retirement.
End your career with a pension. Here's how. Hendrik Jonas / Getty Images

As you plan for retirement, you may want to figure out how to get a pension. I've known many doctors who had a private practice and then began working for the state their last ten years in the workforce so that they could qualify for a pension. This was a smart move on their part.

There are basically two ways to get a pension. Find an employer who offers one, or figure out a way to create your own.

Both are covered below.

What is a pension?

A pension is a source of guaranteed retirement income provided by an employer to employees who have qualified for this benefit. To be eligible for a pension benefit you must work for the company for the required number of years. Your pension benefit usually increases as you accumulate additional years of employment with that employer. Pensions are also referred to as “defined benefit retirement plans” as they are designed to define the future retirement benefit that you receive.

How to get a pension.

To get a pension, you can seek employment with a company or entity that offers pension benefits, and then work there long enough to become eligible for these benefits. Government jobs, both at the federal and state level, offer pension benefits. Some examples would be military, police and fire departments. Large corporate employers may also offer pension benefits, but it is not as common as it was thirty years ago.

Ask a prospective employer if they offer a pension and what you need to do to become eligible for it. 401(k) benefits are not the same as a pension.

With a 401(k) you must contribute your own money to the plan, and the employer will often make a matching contribution, and/or a profit sharing contribution. With a 401(k) plan you are responsible for the decisions about the money inside the plan. If your employer offers a 401(k), but not a pension, one possibility is to use your 401(k) money to create your own pension benefit when you retire.

Make your own pension

At the point you retire, you can use your own savings, such as money in a 401(k) plan or IRA, or savings that is not in a retirement plan, and buy an immediate annuity, which would pay you a guaranteed income for the rest of your life. In this way you will have created your own pension.

Delaying the start date of when you begin your Social Security benefits can also be a way for you to create a larger stream of retirement income for yourself. For example, if you retired at 66, you could use savings to buy an annuity that provided guaranteed income for four years, and then at 70 begin your Social Security benefits, which would pay out a much larger amount at 70 than if you began taking them at 66.

Pensions and your spouse

Whether you get a pension through an employer, or create your own, if you are married, consider your spouse when you make pension choices.

Pensions can be chosen to payout a benefit for your life only, or you can choose a joint/survivor option, which will pay out a monthly amount for as long as either of you should live.