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People often ask if getting a public-sector pension will impact their Social Security benefits, and the answer to that is no. Social Security is largely funded by employers and taxpayers but isn't impacted by public-sector pensions. Getting a public-sector pension has long been misunderstood as taking money out of Social Security but that's not true.

Public-sector employees and the employers that hire them pay into Social Security on their wages, as do federal government employees, military personnel and some other workers at nonprofits or companies whose salaries are too high to qualify as nonprofit (so called 501(c)3 organizations). It's also important to note that there is no such thing as a 'double pension', meaning that you can't collect both a public-sector pension and Social Security.

Large or small, many people have pensions that need to be taken into consideration when planning for retirement. A pension is a promise from an employer to pay you a certain amount of money each month after you retire.

The amount and number of years it will take to receive this monthly payment (also known as the payback period) varies depending on the type of pension plan. However, most plans require employees to meet minimum age and service requirements in order to receive payments. Some employers offer different types of pension plans, including defined benefit and defined contribution plans.

Defined Benefit Plan

A defined benefit plan is the traditional type of pension in which your employer calculates a specific amount they will pay you each month in retirement. However, these calculations are complex, so it's difficult to know exactly what your pension will be worth. One thing is certain, however- the pension amount will depend on your years of service and your average salary during your employment period. If you leave prior to retirement, you may not receive any type of payment from this plan.

Defined Contribution Plan

A defined contribution plan, also known as a money purchase plan, is different from a defined benefit plan in that the amount you receive as a pension will depend on the contributions from your employer and any investment earnings. In this type of pension, it's also possible to leave your money with the current employer or transfer it to another plan.

Do you know how much tax you will have to pay on your pension benefits? You might be thinking it's a lot, but there may actually be some good news in that area. The truth is that your pension benefits will be taxable in the United States if they exceed a certain amount of money in a given year. In order for this to happen, you will need to have an income of at least $32,000 per year and the total amount of money from your retirement account needs to exceed $34,800. Otherwise, you don't have to worry about paying any taxes on your pension.

If you are not sure if your pension benefits will be taxable, go to https://www.irs.gov/taxtopics/tc409.

A single-life annuity is established to provide payments only to the annuitant for as long as they draw on it. It can also be called a "single life" or "term" annuity, which pays out over a fixed period of time, usually 10 or 20 years. A joint-and-survivor annuity, on the other hand, covers two people at once. The payments continue until either spouse dies, which means that if one spouse lives longer than the other, they will receive more of this type of payment.

The other type of joint annuity is a last survivor option, which tells you that the payments will continue only as long as at least one spouse is still alive. If there are multiple beneficiaries or if money needs to be set aside for children who are minors, this can also be called "joint and survivor with children's period." A life annuity with period certain is similar to a joint-and-survivor annuity, because it continues until at least one of the spouses dies. Here, though, there is also a set time frame for payments - usually 10 or 20 years - and if either person outlives this allotted time frame, they will not receive any more money.

The decision of whether or not to invest a lump-sum payout in an annuity is one that many individuals grapple with. The decision will depend on the person's goals, risk tolerance, and other factors.

However, there are some general guidelines for making this type of investment. For example, if you want to make sure your money lasts for several years without running out when you retire or become disabled (which can happen when investing in stocks), then an annuity could be right for you. On the other hand, if you're looking to increase your chances of earning higher returns by taking more risks with your investments (such as through stock investing), then it might be better to choose something else.

So what should you do? It probably depends on your goals. If you want to ensure that your money lasts, then an annuity is a good choice for you. On the other hand, if you're looking to increase the likelihood of earning greater returns, then it might be better to invest in something else.

A major consideration in retirement planning is whether to take a lump sum or annuity income stream from your company's pension plan. Here are the pros and cons to consider when making this decision for yourself.

Con: Lump sum withdrawals may cause you to run out of money by the time you die.

Lump sum payments often come with a 10% penalty if you access it before age 55, but this is waived once you reach your normal retirement date (or the date at which benefits are due under current rules). There's also an additional 20% penalty on the part of what is not drawn down as an annuity.

Con: You may wind up with more money now, but less later.

In most cases, you will receive a higher annual payment from your company's pension plan if you take it as an annuity rather than as a lump sum. If investment returns are strong, the lump sum will grow faster, but this is likely not to be enough to compensate you for taking a larger up-front payment as well as deferring your first annuity check.

Con: You can pass along that money and stretch your inheritance.

Since someone's pension benefits are included in that person's taxable estate - and subject to the federal estate tax - a lump sum payment can have a significant impact on the amount of inheritance you can pass along to your heirs. If this is important to you, going with an annuity makes sense in most cases.

Pro: The flexibility a lump sum may provide in your retirement planning.

If you need to access some or all of your lump sum for a major purchase or expense, the flexibility may outweigh the benefit provided by an annuity.

Pro: You can pass money along with you to your heirs.

If passing on extra money is important to you, taking a lump sum will generally provide you with more funds than an annuity would. However, this assumes that your lump sum will have to be depleted during your lifetime.

Con: An annuity might provide you with more income over time.

An annuity can be a way of guaranteeing yourself a fixed, predictable stream of income for the rest of your life - unless inflation is particularly high when you retire and begins to rise in subsequent years. If this is a possibility, an annuity plan can provide you with more income over time than a lump sum payment.

Con: There may be hidden costs and risks associated with buying an annuity.

If your company offers both group and individual annuities to its employees, the group rates will generally be better than what you can get on your own.

It is important to be aware of the options available when you are considering taking a lump-sum payout or monthly payments.

A large chunk of money can feel very tempting, but it might not always be the best idea. There are many things that need to be taken into account before making such an important decision.

One thing that needs to be considered is what type of investment strategy you have in place for your future income stream. If you don't have any investments set up yet, then taking a lump-sum payment could make sense because it would all go towards investments instead of being spent on day-to-day expenses like groceries and utilities which would come out of your monthly payments. This way, if anything did happen to you, the money would still be there to cover monthly expenses. If you did have a monthly income stream set up for your future, then taking a lump-sum payment would not make sense because there wouldn't be enough left over each month to pay for your bills.

Another thing worth considering is inflation and what it will do to your lump-sum payout. It is true that you can invest the money, but if your investment strategy doesn't pay off (or is delayed in paying off), then you could end up with less than what you started out with after inflation has had its say.

First up, you need to know that there are 2 types of pension available:

1.       A SIPP (Self Invested Personal Pension) - this is where you choose your own investments and can check with your provider what options are on the table for withdrawals before the age of 55;

2.       A SIP (Stakeholder) - this is where your funds are split into various investments and you can't access anything before the age of 55.

So, if you have a SIPP still open it's time to speak with your provider about when/how you can start withdrawing cash.

And, if you're thinking of opening a SIPP then remember that you can access your cash penalty-free from the age of 55.

You'll also need to check when the pension was opened as there's a 5 year rule with regards to paying in and getting tax relief on money going into pensions. If they were set up more than 5 years ago, you won't be able to get tax relief on pension contributions.

And please remember the golden rule: the earlier you start saving, the better off you'll be!

No matter your age or how much you earn, it's never too late to start a SIPP and only if you're over 55 can you access your cash penalty-free.

Vesting is a process that some retirement plans use to calculate how much of the company's stock employees are entitled to. Here's how it works-when an employee begins working for a company, they are given a certain amount of shares in the company. The number of shares depends on the person's position within the company. And while this might sound great at first, it can be troublesome if the person leaves before they have vested their benefits. Vest means to give clear title of ownership, and that is what the company does when they start an employee's vesting period.

Vesting periods are divided into four different categories-Immediate Vesting, Cliff Vesting, Gradual Vesting, and Back-loaded Vesting. And while each category has its own set of rules concerning how the stock is given to the employee, they all have one thing in common-the longer it takes for an employee to vest their benefits, the less stocks they are entitled to when they actually do.

And while some companies allow employees to choose which type of vesting schedule they prefer, most companies have a policy that tells how long the company's employees have to work before they are fully vested. So if you're an employee who is just beginning their employment, make sure to ask your supervisor about the company's vesting schedule policy.

The primary concern is if you need to leave your business before you retire with enough money saved up. I have some suggestions for solving this problem, but it’s not an easy one. One option is to retire now and work on something else. You could always start another business or get a part-time job until things are settled.

Another is to just let the business go. If you don’t plan on managing it anymore, you can sell it and at least recoup some of your investment. Or, if the company is fairly new and still growing, let someone else take over so they can start building equity in the company and keep things going until retirement.

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