A Fidelity Investments survey released in July found that a majority of Americans do not understand how their pensions work.
While over 42 million Americans currently have pensions, 71% of the 500 surveyed by Fidelity did not have detailed knowledge of how their pension plans operate even though over half reported they are depending on those pensions to help pay for living expenses in retirement.
31% of those surveyed said they don’t know their plan’s vesting schedule, 40% don’t know what their payment options will be upon retirement or when leaving their company and 27% don’t know at what age they can begin to receive payments.
Meanwhile, 61% of those surveyed said they have never asked how much money they will receive when they retire, Fidelity reported. The reason: 43% said they rely on their employer to provide the information if needed and 29% report they aren’t knowledgeable about the plan or they do not know whom to ask for information.
Understanding your pension benefits is an important part of developing an accurate income plan for retirement. In another blog article, Calculating Your Retirement Needs, we discuss the importance of knowing where you plan to get your income. If you do not know the details of your pension you will not be able to accurately calculate your retirement income.
Oaktree Financial Advisors has helped hundreds of Eli Lilly employees with these matters and we thank them for letting us serve them. We welcome any questions you may have.