{"id":21060,"date":"2025-12-15T08:51:00","date_gmt":"2025-12-15T14:51:00","guid":{"rendered":"https:\/\/www.discover.com\/online-banking\/banking-topics\/?p=21060"},"modified":"2026-02-04T12:12:39","modified_gmt":"2026-02-04T18:12:39","slug":"retiring-with-a-pension-and-social-security","status":"publish","type":"post","link":"https:\/\/www.discover.com\/online-banking\/banking-topics\/retiring-with-a-pension-and-social-security\/","title":{"rendered":"How to plan for retiring with a pension and Social Security"},"content":{"rendered":"\n

Mapping out financial stability in retirement can be stressful\u2014and a lot of work. That\u2019s particularly true if you plan on retiring with a pension and<\/em> Social Security. As you plan savings and develop strategies for retirement<\/a>, you\u2019ll probably have a flood of questions, including: Can you collect pension and Social Security at the same time?<\/p>\n\n\n\n

Determining how pensions interact with Social Security\u2014and how they can work together to maximize retirement income\u2014is a common challenge. According to the U.S. Bureau of Labor Statistics<\/a>, 86% of government employees and 15% of private sector workers have access to defined-benefit pensions.<\/p>\n\n\n\n

Whether you\u2019re years from leaving the workforce or actively pursuing an exit strategy, understanding these benefits could mean the difference between financial security and worrying about running out of money in retirement<\/a>.<\/p>\n\n\n\n

Pension and Social Security basics: Understanding the difference<\/h2>\n\n\n\n

If you\u2019re retiring with a pension and Social Security, you should understand the essentials of both options.<\/p>\n\n\n\n

Pension plans: The employer\u2019s promise<\/h3>\n\n\n\n

A defined-benefit pension promises to pay qualified employees a specific amount of money every month of their post-retirement lives. Think of it as a retirement paycheck. While you\u2019re working, your employer sets aside money from all participants and invests it. This pension fund helps ensure the company can pay participants\u2019 future benefits, regardless of how the market performs.<\/p>\n\n\n\n

The monthly defined-benefit pension payment amount is guaranteed and determined by a formula, typically based on salary history and years of service. For example, a plan might pay 2% of your average salary for your highest-paid three years, multiplied by the number of years you worked there. So, if you worked for 30 years at the organization, and your highest three-year average salary was $80,000, you\u2019d take 2% of $80,000, which equals $1,600. Multiply that by 30 for the years you worked at the company, and you\u2019ll receive $48,000 per year from your pension in retirement.<\/p>\n\n\n\n

Although most private sector companies no longer offer defined-benefit pensions, many of the largest U.S. employers continue to manage legacy pensions<\/a> alongside other retirement offerings like 401(k) plans, according to the Bureau of Labor Services. However, defined-benefit pensions remain common among public-service jobs and still cover tens of millions of those workers, according to the Congressional Research Service<\/a>.<\/p>\n\n\n\n

Social Security: A retirement safety net<\/h3>\n\n\n\n

Social Security is the federal government program funded through payroll taxes that provides a basic level of retirement income. According to the Social Security Administration<\/a> (SSA), nearly 9 in 10 people age 65 and older receive these benefits, making it a cornerstone of retirement planning for most Americans. <\/p>\n\n\n\n

But Social Security works differently than pensions. Social Security benefits<\/a> are calculated based on your lifetime earnings. Rather than focusing on the three highest-earning years, as pensions often do, the SSA reviews your 35 highest-earning years (adjusted for inflation) before age 62. It then averages those and applies a formula that favors lower-income workers.<\/p>\n\n\n\n

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For example, in 2025, you would receive 90% of your first $1,226 in average monthly Social Security payments. Above that, you\u2019d be eligible for just 32% of earnings over $1,226 and just 15% of anything over $7,391.<\/p>\n\n\n\n

You can adjust this amount based on when you decide to retire and start claiming Social Security benefits. For example, collecting retirement payments early<\/a> at age 62\u2014when technically eligible\u2014reduces your monthly check by up to 30%, according to the SSA<\/a>. Waiting until age 70 increases it by 8% per year beyond your full retirement age (age 67 for those born in 1960 or later).<\/p>\n\n\n\n

A deeper look at how benefits are calculated<\/h2>\n\n\n\n

Those retiring with a pension and Social Security benefits will need to do some research and basic math to determine how much they can receive from each.<\/p>\n\n\n\n

Factors for calculating pension benefits<\/h3>\n\n\n\n

For those wondering how to plan for retirement with a pension, three variables determine what pension benefits will look like.<\/p>\n\n\n\n

1. Years of participation.<\/strong> The U.S. Department of Labor<\/a> sets specific guidelines for pension participation:<\/p>\n\n\n\n