Pensions Give Retirees Greater Peace of Mind

Four people open up about their finances and how they spend their time

- VERONICA DAGHER AND ANNE TERGESEN

The pursuit of happiness in retirement is a lot easier with a pension.

Retirees with regular paychecks report higher levels of satisfaction than those who rely on 401(k)s to supplement their Social Security, studies have shown. The security of a lifelong income is a source of comfort and happiness, those with pensions say.

While 401(k)s can generate more wealth, retirees say navigating all the investing, tax and withdrawal strategies can add to their stress when they are trying to lower it.

Pensions do have drawbacks. It can be hard to amass a sizable monthly benefit unless you stick with one employer for decades, and the income isn’t always adjusted for inflation, said Gal Wettstein, an economist at Boston College’s Center for Retirement Research. If employers go bankrupt, benefits might be cut, he added.

But, as Oscar Wilde said, “It is better to have a permanent income than to be fascinating.” Those who live comfortably on pensions—most government workers and 15% of private-sector workers have access to one, according to the U.S. Bureau of Labor Statistics—tend to agree.

Below, four retirees who say the trade-offs are worth the peace of mind.

Eric ‘Rick’ Larson Location: Reston, Va. Annual income: $156,000 Annual spending: $105,000 Rick Larson’s two pensions more than cover all his annual expenses right now.

“My friends have to manage their retirement savings for the rest of their lives. I don’t have that pressure,” the retired Air Force colonel said.

Each month, his military pension brings in $8,100 pretax and his privatesector pension gives $800. (The former is inflation-adjusted; the latter isn’t). He receives $4,100 pretax a month from Social Security, and the military provides medical coverage that supplements his Medicare.