What American Retirement on a Pension Really Looks Like

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 enhance their Social Security benefits, studies indicate. 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 various investment, taxation, and withdrawal tactics only increases their anxiety as they aim to decrease it.

Pensions come with certain disadvantages. Accumulating a substantial monthly payout typically requires staying with the same employer 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 financial stability through their pensions—including most public sector employees and about 15% of those in the private sector, based on data from the U.S. Bureau of Labor Statistics—are likely to concur with this sentiment.

Here, four retirees claim that the compromises are worthwhile for the sense of security they provide.

Rick Larson's two retirement benefits easily meet all of his current yearly costs.

“The retired Air Force colonel mentioned that his friends must handle their retirement savings throughout their remaining years, but he doesn’t face this same pressure.”

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 through Social Security benefits, and the military covers him with additional health insurance that complements his Medicare plan.

Larson allocates approximately $6,000 monthly towards ongoing costs and sets aside the leftover $7,000 for trips. His financial obligations include two mortgages: one costing him $2,500 per month 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 and enlisted in the military during the Vietnam War, he had no intention of making it a lifelong profession. Instead of waiting to be drafted, he opted to join the Air Force, believing 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 not sent to deploy in 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 started learning Japanese.

The pair relocated 17 times throughout their journey. In 1991, during the Iraq war, they found themselves in Cairo, with Karla teaching there. According to Larson, he managed to arrange for US aircraft, which refueled military planes, to operate from an Egyptian Air Force facility.

In the year 2000, he stepped down from his position as a colonel and transitioned into consultancy with a defense firm, focusing on intelligence-based initiatives.

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’s looking forward to embarking on an around-the-world cruise and enjoys watching Kansas City Royals games at stadiums across the nation.

When at home, Larson participates in 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 during these times.

He only began contributing to a 401(k) plan once he exited the military at age 53. Since his military pension took care of all his living costs, he maximized his contributions each year by using pre-tax dollars and also set aside post-tax funds which he then rolled over into a Roth account. Today, he boasts an impressive portfolio exceeding $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 lacking pension plans," he stated.

At the age of 55, Patricia Pekar decided to retire when she discovered that her pension would cover 67% of her salary.

Emancipated from her work, she dedicates more of her time to volunteering at her church or riding her motorcycle alongside her spouse, cruising freely across the vast highways.

I enjoy being in wide-open spaces," stated Pekar, who is 67 years old. "The solitude appeals to me, as well as listening to the surrounding noises.

Pekar secured her retirement benefits through three decades of service—as both a clerk and a legal professional—in Ohio's municipal and county administrations. Her pension started building up during her time at college when she worked for Dennis Kucinich, who once served as Cleveland’s mayor before being elected to Congress.

Upon obtaining her law degree, she began working for Scioto County located 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 financial contributions from absent parents, which significantly benefited numerous single mothers.

Pekar and Bates, who are both 67 years old, presently receive approximately $7,780 per month before taxes. This amount includes $5,400 from her inflation-adjusted pension, $750 from her part-time job as a bookkeeper, and $1,635 from his Social Security benefits.

Pekar mentioned that the pension encourages financial restraint, as she monitors her expenditures closely. Her monthly costs consist of $150 for cell phone and internet services, $370 for heating and electric bills, along with $400 allocated for food purchases.

Bates pulls in an additional $20,000 annually from her real estate career, covering the pair's travel expenses and one-time 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 amount—however, on Saturday, the Senate passed a measure that repeals 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 approve the 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 generally avoid dipping into the remainder.

They embark on extensive journeys aboard their Harley-Davidsons, heading to 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 with their congregation to Lourdes, France.

Bates is part of a band that plays drums for audiences at nearby pubs and eateries. Pekar belongs to four female equestrian groups. She mentioned men can join too, provided they stay towards the rear of the group during rides.

There exists a bond among riders," she stated. "This sense of community 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 many years back has now turned into the central activity during his retirement. There’s an art studio in his house where he loves to create paintings of cars. After stepping down 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 always been diligent about saving money, he mentioned. During his teenage years, his family once came close to becoming homeless. Since then, he has strived to save as much as he can and maintain frugal habits, he explained.

Each year, he allocates approximately $60,000 for expenses, of which his mortgage is the most significant cost. His current mortgage balance stands at around $300,000 with an interest rate of 2.99%, tied to the house he purchased following his divorce nearly two decades ago. He mentioned that he sees no urgency in paying off this loan and does not have any additional debts.

Priddy decided to wait until reaching 66 years of age before applying for Social Security benefits, receiving approximately $2,600 monthly as a result. Additionally, he has around $850,000 accumulated in an untouched retirement fund primarily allocated to stock investments.

Every weekday morning, he rises at 5 a.m., making his way to the gym for an exercise session lasting forty minutes. Afterward, he returns home to whip up a hearty breakfast featuring no fewer than three eggs alongside protein-dense toast. Most of his dishes are homemade, including occasions where he invites fellow gym-goers over for lessons in preparing nutritious cuisine.

"I'm busier than ever," Priddy stated.

During his 25-year tenure with the state of California, Ken Thompson wasn't fond of most positions he held.

But the 71-year-old achieved what they desired.

"I put in my time so I could receive a pension eventually," stated Thompson, who retired 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, coupled with an additional $2,200 monthly through Social Security benefits. Furthermore, he has accumulated savings totaling $110,000, which is diversified across investments in stocks, money-market funds, and certificates of deposit.

Although he hasn't increased his expenditures, he and his spouse still allocate roughly $3,400 monthly, with the majority going towards their home loan.

Over the last few years, whatever funds remained at the close of each month were allocated towards paying down various debts such as credit card balances and auto loans, or they went toward refurbishing their house. With the exception of their mortgage, they have successfully eliminated all their debts. Nowadays, Thompson usually deposits any extra 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 there was an assurance of receiving a retirement pension. However, once the company folded, the pension—he mentioned it might have been valued around a couple of thousand dollars—disappeared as well.

That was when he opted for a career with the government, primarily focusing on information security roles.

He feels secure with his pension, but their monthly grocery costs are eroding that stability, he mentioned. Prior to the pandemic, he could purchase groceries for both of them for around $150 per week. Currently, though, he spends approximately $300 weekly on groceries. The Thompsons meticulously monitor their expenditures and have reduced their discretionary spending. 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 fewer benefits.”

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 for the fact that most of his medical expenses not covered by Medicare are mostly offset by state assistance, he mentioned.

Although his physical activities are restricted, he can still manage to walk his dog around the neighborhood several times each week. He finds pleasure in reading and staying updated with current events in both business and politics.

"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