If you’re fortunate enough to be working somewhere that offers or offered pension benefits then congratulations are in order. Very few in today’s world have that level of retirement benefit anymore. But once you are pension eligible, is staying on the job to work longer instead of retiring the best way to go? Many times the answer is NO.

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Things To Consider Once Becoming Pension Eligible

Whether you have a defined contribution plan or a defined benefit plan, it will represent a big part of your retirement funding. Those who have enough in pension and retirement savings to retire usually do retire. But if you don’t and have decided to stay working, wouldn’t you want to maximize your pension benefit and future retirement funding?

Post Pension Eligibility Growth

You may be surprised at how little your pension benefit grows going forward. Once you’ve reached your pension eligibility milestone and get the big bounce, the additional years of service may offer very little if any growth. The first step is checking with your company’s pension administrator or HR benefits representative to find out what your pension estimate is. Then find out how much it increases if you stay on the job.

For instance, where I worked, you were fully pension eligible with 30 years of service regardless of your age. If that happened before reaching age 55, then your pension would grow 3% a year until age 55. But after that it was based only on salary increases and your highest consecutive 5 year salary averages. It took big raises to move that needle.

Frozen And Going Nowhere Fast

For many, this little retirement benefit investigation starts right away with bad news. You’re reminded that your pension was frozen by your employer. Meaning that it won’t grow at all or may grow far-far less than their pre-freeze pension rules over the time we stay. That pension benefit then becomes negatively affected by inflation before we even collect a single penny.

Got Retirement Benefits? Don’t let them sit, let them rip!

Once we reach pension eligibility, whether it is frozen or not, decide if the rate of growth is too little to make it worth staying. The pension benefit growth rate is nothing we have control over. Why not pull it out and put our retirement benefit to work for us? Maybe pulling your cookies out of their cookie jar and rolling them into your own IRA cookie jar to control investment direction or beginning your pension annuity payment now is the better retirement strategy. Don’t underestimate the power of working and collecting a pension check to invest or a lump sum to rollover to supercharge your retirement savings. If you are going to work anyway, this strategy of changing the scenery is all about giving yourself the chance to grow your retirement portfolio.

Why Are You Still Working There Instead Of Taking Your Pension And Running?

Need To Work Longer

There are many reasons why someone who has a pension benefit needs to work longer. From simply wanting to still work to needing more time to meet retirement financial targets. But nothing says you have to stay at your same job and company to meet your goals. This is a great time to pursue opportunities in the same industry with a different company or go in a new direction and do something completely different. The best time to find a great job is when you have one. Consider looking and applying for outside opportunities while on your job. See what’s available, choose the perfect position, and understand your options. Then once hired, announce your retirement and apply for your pension and other retirement benefits.

Love What You Do

Perhaps you stay because you love what you are doing. Do you think that you would love doing it just as much somewhere else? Especially when knowing that you have taken control of your locked up pension and have the chance to better grow your retirement portfolio?

Coworker Friends

Is a big reason you are there due to friends you have on the job? Nothing says you can’t stay in contact. In fact, your being at a different company will add a whole new dimension to your conversations. Taking your pension and running will also allow you to easily expand your social circle and professional network.

Comfortable

It can be very comfortable working a job you know from end to end. But be honest with yourself. Do you sometimes feel like you are stagnate? Starting a new job will be exciting and carry a bunch of optimism about your future. True, it will also bring some discomfort from temporary stress until you learn the ropes. The key word here is temporary. A little stress early on and before you know it your comfort will return. Start thinking about the possibility of personal growth through a new job.

Lucky Are The Few With Retirement Health Insurance Benefits

If you have retirement health benefits, you are open to look for a lot more opportunities since health care won’t be a target factor. If the position offers employee health insurance benefits, you can explain that you have coverage. Then try to negotiate your salary up because you won’t need theirs. Being able to accept any position whether they have health insurance benefits or not is a huge advantage. Obviously if you don’t have retirement health benefits, limit your opportunity search to companies that offer employee health coverage. If starting your own business, expanding an existing side hustle, or choosing an opportunity without benefits, check for all available health insurance options. Consider the cost of health care in your decision.

Pension Eligible – Should you stay or should you go?

There’s nothing wrong with being pension eligible and still working for your same company. But maybe you should really consider taking your retirement strategy to the next level by retiring and moving on. This strategy isn’t theory. I was in a pension plan that kept changing the rules, converted many employees from a defined benefit to a defined contribution plan, denied others completely, and then finally froze it. I retired a young 51 and have enjoyed and benefited from my retirement gigs and a short but sweet encore career. While I was doing that, I used what pension cookies were left to me to grow in my cookie jar and executed a strategy to increase my net worth.

If you are pension eligible where you work, take a step back from the same-old same-old and see if you could be doing something better for your eventual retirement. Then do some research and check available opportunities. If you need it, even if for nothing more than a confidence boost, consult with a CFP for some financial advice. Even if you decide to stay after doing all of that, then you will at least have the knowledge about your pension going forward. That way you can proactively close any discovered pension growth deficiency by setting aside additional savings on your end.