Can I Work & Still Receive Pension Benefits?

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Pension benefits are retirement plan benefits that are set up by your employer. Your employer contributes money to your retirement plan and then gives you a guaranteed income when you retire. You may decide to keep working after you retire. In these situations, you can still receive your pension.

Process

  • You file a claim with your employer to receive pension benefits. Your employer sends you pension benefits when you retire. These benefits are guaranteed for your life, regardless of what happens to you or whether you decide to find other work. You usually have several choices when filing for benefits. You may take regular benefit payments throughout the remainder of your life. Alternatively, you may take an option of reduced pension payments, which allows you to give some of the money from your pension to your spouse after you die. Finally, you may take a lump sum amount from your pension, which represents the total value of the pension savings set aside for you, less any interest that would have accrued on the money had it remained set aside for regular payments.

Significance

  • Your pension plan benefits are not dependent on your work status. You receive these benefits when you retire, but you're allowed to continue working for another employer. You must, though, retire from the employer that you are receiving pension benefits from.

Benefit

  • You can increase your retirement income by going back to work after retiring from your job to help you pay for expenses that you otherwise wouldn't be able to afford on retirement benefits alone. Your benefits don't decrease, because the pension payments are based on an annuity. An annuity is an insurance policy that pays a fixed payment every month. Once the annuity starts, it cannot be altered.

Consideration

  • Your employer pension payments won't be affected by your going back to work, but your Social Security income might be. If you claim Social Security benefits before your full retirement age to supplement earnings, you can only make $14,160 annually, or your benefits will be reduced. Once you reach your full retirement age, there is no limit on earnings.

References

  • "Ernst & Young's Personal Financial Planning Guide, 5th Edition"; Martin Nissenbaum, Barbara J. Raasch, Charles L. Ratner; 2004
  • "Practicing Financial Planning for Professionals (Practitioners' Edition), 10th Edition"; Sid Mittra, Anandi P. Sahu, Robert A Crane; 2007
  • SSA: You can work and get Social Security at the same time
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