Pensions (defined benefit plans) promise a specific monthly income based on years of service and salary. They shift investment and longevity risk to the employer — the retiree just receives the check.
Pensions have become rare in private-sector US employment (largely replaced by 401(k)s) but remain common in government, education, and some legacy industries. Vesting periods, survivor options, and inflation adjustments vary widely between plans.
Practice this in Aurora
Project this decision against your real numbers with a private, calm dashboard.
Open Financial OS →Frequently asked questions
Is a pension better than a 401(k)?
A generous pension can be more valuable than a 401(k) match — but you can't take it with you if you leave before vesting. Compare the actuarial value against the flexibility of portable accounts.
Related terms
Retirement
The stage of life when you have enough savings and income to make paid work optional.
401(k)
A US employer-sponsored retirement plan with tax advantages.
Annuity
An insurance product that converts a lump sum into a stream of income payments.
401(k)
A US employer-sponsored, tax-advantaged retirement plan.