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.

alor1348 jeff
Jeffrey T. Dobyns


President, SageSpring | Financial Advisor, RJFS 

Jeffrey T. Dobyns

President, SageSpring | Financial Advisor, RJFS

Beyond crunching numbers and investment strategies, at SageSpring, we’re about building relationships. When you encounter Founder & President of SageSpring, Jeff Dobyns, it’s easy to understand why this is at the very heart of who we are as a firm. You won’t find stuffy formalities with Jeff; instead, you can expect to find him sharing a warm smile, communicating a compelling vision, or patiently untangling life’s complex challenges with clients. He believes in truly getting to know clients, understanding their aspirations and priorities, and navigating their financial plans with a tailored, comprehensive approach. Our team members have often been caught taking notes on Jeff’s effortless relationship skills from a distance, and we admire them for striving to learn from one of the best. 

Jeff’s financial expertise and wisdom are the perfect match to his innate people skills. Jeff holds the prestigious CERTIFIED FINANCIAL PLANNERTM certification, Chartered Life Underwriter (CLU®), and Chartered Financial Consultant (ChLU®) designations, and has held executive positions with financial planning firms for more than two decades. 

His dedication extends beyond the office to the boardroom and the local community, where Jeff is passionate about giving back. He serves as Chairman of the Board of Men of Valor, a prison ministry and mentoring program. Jeff also serves on the board of Send Musicians to Prison, which shares hope, healing and restoration with the imprisoned through musicians & artists. Jeff actively supports other initiatives in the community by sitting on the board of The Signatry of Middle Tennessee and the Halftime Institute of Nashville. 

Witnessing his four children, Gracyn, Hunter, Tanner, and Logan, excel on the field is almost just as rewarding, if not more, than celebrating the victories of seeing his clients overcome obstacles and build wealth. Spending weekends boating on the lake, hiking mountain trails, and fishing with his family are the moments Jeff cherishes most. It’s this grounded perspective that reveals the true meaning of wealth for Jeff: not just numbers on a page, but the freedom to create experiences that enrich your life and the lives of those you love. When you choose the Dobyns McMillin Wealth Team, you choose more than financial expertise. You choose a partner who champions your dreams, celebrates your victories, and walks besides you on the path to achieving your unique goals.

**Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER TM, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.