happy couple going through terms of an agreement during a meeting with financial advisor.

Is Retiring Early with a Pension a Good Idea?

Thinking about an early retirement? You’re not alone. If you’re one of the 15% of private sector working Americans who have a pension retirement plan, you might be wondering if now is a good time to make your exit.1 But before you start planning your retirement party, it’s wise to have all the facts, especially when it comes to how the rising inflation and interest rates may be affecting pension plans everywhere. 

Pension Plans and Inflation

Pension plans used to be the norm for many companies (and their hard-working employees). But in recent years, company pension plans (and their beneficiaries) have seemingly been overshadowed by what seems to be the more popular 401k plan—especially companies in the private sector.2 Many government or service-oriented companies and organizations might still offer pension retirement plans. 

If you’re planning on funding retirement on a pension plan, you know that there are two ways to receive your hard-earned money: a lump sum or a monthly check. The amount of money you receive, as a lump sum or through a monthly check, is based on a variety of factors, some of which include your age, how long you’ve been with the company, and the benefit interest rate. 

If you’re near retirement age, you might be wondering how inflation and interest rates will affect your pension. Some pension plans may not account for the cost of living or inflation rates. Most employers calculate employee pensions at the start of each year based on the current interest rate. If the interest rate has been affected by inflation like it has throughout 2022, you’ll notice a hefty dent in your lump sum pension fund. 

How Your Pension is Calculated

Pension calculators take your years of service, multiplied by your average ending salary, multiplied by your accrual rate.That number will give you your annual lifetime benefit. When you divide that by 12 months, that will tell you how much to expect if you choose to receive a check every single month instead of a lump sum. 

If you are considering your options with your pension and want a better understanding of different payment options, check out this retirement with pension calculator. Retirement with pension calculators will help you put some facts and numbers down on paper to help you decide what may be the best plan of action for your individual situation.

Retiring with a pension

Retirement planning is an important part of having a solid financial strategy. And if you’re counting on your pension to get you through, that’s ok. But it’s also important to remember that having more than one stream of income during retirement is key. 

Talking with your financial advisor is a good step you can take to work on a solid retirement strategy. We’ll help you determine how far your pension will take you during your retirement years. Contact a SageSpring advisor today.

Investment advisory services offered through SageSpring Wealth Partners, an independent registered investment adviser. SageSpring Wealth Partners is not a registered broker dealer and is independent of Raymond James Financial Services. Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Representatives may not be registered to offer securities and advisory services in all states. 

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of SageSpring Wealth Partners and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation. 

These calculators are hypothetical examples used for illustrative purposes and do not represent the performance of any specific investment or product. Rates of return will vary over time, particularly for long-term investments. Investments offering the potential for higher rates of return also involve a higher degree of risk of loss. Actual results will vary.

Jeffrey Dobyns
Jeffrey T. Dobyns


President, SageSpring | Financial Advisor, RJFS 

Jeffrey T. Dobyns

President, SageSpring | Financial Advisor, RJFS

Jeff Dobyns is President and Founder of SageSpring Wealth Partners. Passionate about serving his clients, he strives to truly get to know them, understand their goals, and provide them with financial confidence before developing and executing ongoing, strategic financial plans. 

In order to meet the highest standards of professionalism and ethics in the industry, Jeff is a CERTIFIED FINANCIAL PLANNER™ professional, a Chartered Life Underwriter, a Chartered Financial Consultant, and a participant of the Dave Ramsey SmartVestor referral service program.

Jeff has held executive positions with financial planning firms for more than two decades. He served as VP of Investments of Lykins Financial Group CPAs before founding SageSpring in 2002. Jeff has been recognized for his unwavering commitment to his clients, and as a leader among Raymond James financial advisors, earning membership in Raymond James Chairman’s Council every year since 2008.

Jeff devotes considerable time and resources to a number of causes. He serves as Chairman of the Board of Men of Valor, a prison ministry and mentoring program. He is on the advisory board of The Signatry of Middle Tennessee, which works with families to increase their charitable giving to their favorite causes, as well as the advisory board for Halftime Institute of Nashville, an organization that coaches marketplace leaders to discern and engage in their life purpose. Jeff also serves on the board of Send Musicians to Prison, which shares hope, healing and restoration with the imprisoned through musicians & artists. He is a past board member of Porter’s Call, a Nashville charity that provides free counseling for musicians and their families, and the Martha O’Bryan Center, which empowers those in poverty to transform their lives through work, education, employment, and fellowship.

Jeff and his wife, Amy, are grateful to be raising their four children, Gracyn, Hunter, and twins Tanner and Logan at Christ Presbyterian Academy. Jeff enjoys being outdoors with his family- boating, hiking, skiing, hunting and fishing.

Ramsey Solution’s relationship and agreement is between SageSpring Wealth Partners only. Raymond James Financial Services, Inc. is not affiliated with the solicitor arrangement between Ramsey Solutions and SageSpring Wealth Partners.

Membership is based on prior fiscal year production. Re-qualification is required annually.  The ranking may not be representative of any one client’s experience, is not an endorsement, and is not indicative of an advisor’s future performance. No fee is paid in exchange for this award/rating.

Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, and CFP® (with plaque design) in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.