I'm 55 with a state pension in my future. Do I have to save as much as other people?

Yahoo

12-06-2025

I regularly see articles stating how much someone should have saved, based on their age at retirement, to last them the rest of their life. I was fortunate enough to belong to a defined-benefit state retirement plan that guarantees a monthly payment for life of $3,600 and a 50% survivorship option for my wife.
With that in mind, would the calculation made by my wife and I be different from someone who does not have a pension plan? We currently have a net worth of about $500,000 to $600,000, with about $180,000 of that in an investment fund.
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I am 55 years old and would like to consider retirement at around 60 to 62 years old.
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Related: I'm 65 and she's 55. Should we get married for Social Security benefits?
You bring up a good point – the rules for retirement savings aren't the same for everyone. It really boils down to knowing — or, at least, estimating — your retirement income.
This is a hard ask for anyone. Even those who save $1 million or more can't say for sure what their retirement income will be. Not only do people have to save as much as they can, but then they have to figure out how to spend it down in a way that allows them to live comfortably, but reserve enough for old age. Mix in estimates for inflation, investment returns and the unexpected, and you can see how complicated the process can be.
Spending down money in retirement, known in the investment world as decumulation, stumps even the best savers. Think about it, you dedicated decades of earnings to build up a nest egg to pay the bills and live out your retirement dreams and then you have to see that account balance start to dwindle while you are no longer bringing in other income? That can be terrifying.
Pensions certainly bring a sense of relief to those stressful calculations, because that's money you're being given without having to tap into the reserves you've set aside. Of course, some recipients might worry that the pension fund will run out of money while they're living, but if you are a part of a healthy, stable defined-benefit plan, you're in much better shape than many other retirees.
So to answer your question: Yes, the calculation for how much you should save could very well look different to the calculation of someone without a pension. Just not always.
Assess how much you expect to spend in retirement. First figure out what you anticipate your expenses to be per month in retirement: add up the cost for housing, taxes, utilities, groceries, medications, cars and their maintenance, and anything else you want or need to include (such as hobbies, dining out, gifts, and so on). Then figure out what money you're bringing in. The numbers will fluctuate. Your financial plans will also evolve at certain milestones in your life — when you claim Social Security and/or whether you experience a costly medical event.
The difference between someone with a pension and someone without is how much of their personal savings will make up the income that pays the bills. For example, if a retiree's monthly expenses were $5,000 and she didn't have a pension, she'd have to come up with the money herself, such as by relying on her savings and Social Security to meet those demands. On the other hand, if she had a pension that brought in $3,600 a month like you do, then she only needs to account for around $1,400 a month. The difference in what she pulls from her savings leaves her with much more money in her account — and much less pressure to have amassed a nest egg that would pay her bills from the day she retires to the day she dies.
Another caveat to relying too heavily on a pension: if it isn't inflation-adjusted, the rise in the cost of living would eat away at the value of that income over time.
Does this mean you should lean back, relax and not worry about saving all that much? I would say no to that. Pensions may feel like a magic bean in your pocket, but the onus for retirement security is and will remain on you and your wife. Take for instance retiring between ages 60 and 62. If your employer doesn't offer some sort of retiree health insurance, you'll have to find it another way until you are eligible for Medicare at 65.
Even though you'll find relief when you see that money come in every month, continue to think long-term with your current finances, and make sure you and your wife come up with a plan that gives you as much financial freedom as you wish.
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