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The Shift from Pensions to 401(k)s: What It Means for Your Retirement

Saadia Ahmed, CFP®

1 min read

May 10

Before the 1980s, many jobs came with the benefit of a lifetime pension. You worked for a company for a certain number of years, and you were guaranteed a monthly income at a certain age. Some pensions even provided cost of living adjustments (COLA). However, since the introduction of the 401(k) plan in 1978 and its rise in popularity after IRS regulations in 1981, there has been a significant decrease in pensionable jobs. The responsibility for retirement savings shifted from companies to individual employees. That’s a good thing, right? You now have more control over your savings and your retirement income.


On the surface, this seems beneficial. However, for most people, life happens, and before they know it, they are in their forties with minimal retirement savings. For many young adults, it is hard to put away a significant portion of their income into an account that they cannot access until they are 59½. In my nearly two decades of working with clients, I’ve found that the most secure retirement incomes come from pensions. With a pension, you don’t have to worry about the ups and downs of the stock market or the real estate market. Nowadays, pensions are usually offered by federal, state, or county government jobs. So, the next time you are evaluating job opportunities, take a second glance at the ones that offer a pension or make sure that you start contributing to your retirement plan from your first job.

Saadia Ahmed, CFP®

1 min read

May 10

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