My Pension Is Not a Safety Net
In this post, I discuss the points I make in my next YouTube video addressing a vicious comment I received. The commenter attempted to discredit my early retirement story because I have a pension, characterizing it as a safety net I can simply fall back on. The general message I took from the comment was that I don’t struggle like other retirees because I have a pension, so people shouldn’t listen to what I have to say or heed my advice—or they’ll become financially ruined.
My purpose in responding to the now-deleted comment is to encourage people who are considering early retirement and might become disheartened by this type of negativity.
First of all, let me say that I do value my pension. It’s a significant blessing, especially since my retirement package also includes low-cost healthcare. Without the pension, my early retirement would not be possible. It’s by far my largest source of income.
I share my unconventional story not as advice, but because I hope to inspire folks to brainstorm how they can use their own resources to create successful retirement plans. Yes, I’m blessed with a partial teacher pension. Other people are blessed with resources I don’t have, such as much larger pensions that leave them with plenty of money after paying their bills, substantial savings, investments, or insurance. Some people are blessed with inheritances, trust funds, or annuities. Many people are blessed with a spouse—a financial partner—or a supportive family member who helps pay the bills.
My main point is that everyone’s retirement strategy looks different based on the resources available to them. Dismissing someone’s experience or calling one of their resources a “safety net” simply because their situation differs from my own would be counterproductive. Instead of reacting with fear or hostility, my goal is to support others and exchange ideas. Every perspective adds value to the retirement conversation.
Here, I address five myths about my $36,000 pension and use the financial realities of my life to disprove each misconception.
Myth #1: My Pension Alone Made Early Retirement Possible
The first myth is that my pension alone made it possible for me to retire. In reality, I had to do some savvy number-crunching to make my expenses fit my retirement income.
Can you imagine living on only $36,000 per year? For me, it means living within my means. I don’t live in my dream home. I drive an economy car that provides basic transportation from point A to point B. I cook most of my meals at home. I complete DIY projects rather than buying expensive furnishings or paying for costly repairs. I do my own hair, nails, and skincare. I have no gym membership, but work out at home with basic equipment. I wear the same old clothes. I don’t buy designer shoes or pocketbooks, and I don’t take expensive vacations multiple times per year.
Many of the people I see around me spend much more than $36,000 per year, carry much more debt, and place a higher priority on keeping up with the Joneses than I can afford to on $36,000. Because of that, many of them might not be able—or willing—to adjust their lifestyles to live on a $36,000 pension, even if they had one.
It’s not only about which resources you have. It’s also about what you do with them. I used to live that way too, spending beyond my means, until I turned my financial life around.
Over the years, I learned to manage my money more intentionally and adopted some key financial practices that helped me pay off debt. I no longer have any credit card debt, and my car is paid off. Instead of spending frivolously, I made double monthly payments. Whenever I received a chunk of money, I put it toward my financial goals.
I also applied for student loan forgiveness, which brought my monthly payments down to a manageable amount.
So, it’s not the pension alone that makes my retirement possible. It’s a combination of factors: my pension, affordable healthcare, no revolving debt, and a much lower mortgage and student loan payment than I had in New Jersey. Of course, downsizing and relocating to Delaware—at least two hours away from my family and where I grew up—was also a huge factor.
Myth #2: My Pension Makes Me Financially Secure
The second myth is that my pension makes me financially secure and makes it easy for me to retire early. However, even after significantly downsizing my life, $36,000 still wasn’t enough to fall back on and pay my bills in New Jersey.
I was more than $800 short every month while living in a two-bedroom condo with approximately $2,300 in monthly mortgage and HOA payments and a $200 car payment. Those expenses are relatively conservative compared with what many people living in New Jersey pay.
Now that I’ve downsized, moved to Delaware, significantly lowered my mortgage, and eliminated my car payment, I’m still seeing that I’ll probably begin coming up short every month again in 2027 or 2028 because of inflation.
My pension doesn’t have a cost-of-living adjustment, or COLA, so it will only go so far during the years before I can claim Social Security at 62. It will continue to diminish in value afterward as well, potentially jeopardizing my financial security during my later years.
The reality is that I’m living paycheck to paycheck. My savings can cover minor emergencies of up to $5,000, but I can’t handle a major crisis or the cost of long-term care.
So no, I wouldn’t describe myself as financially secure.
Myth #3: $36,000 Today Means $36,000 Forever
I mentioned my lack of a COLA earlier. Every year, as the cost of living increases, my pension loses value.
My mortgage principal-and-interest payment will never increase, but my total monthly payment will continue to rise as property taxes and homeowners insurance increase. Energy costs, food prices, fuel, services, and out-of-pocket medical expenses all increase with inflation.
Maybe $36,000 sounds like a lot of money to some people—although it doesn’t to me—but it will continue losing purchasing power over the years and decades until it is worth very little compared with what it can buy today.
Another serious concern is that teacher pension systems in general—and mine in particular—can become unstable when governments and school districts underfund them, raise minimum-age qualifications, or phase pensions out altogether.
These actions make the teaching profession less attractive. Why would a young person choose to become a teacher if, in addition to the low pay, there is no longer a reasonable retirement package? Fewer new teachers entering the field means fewer active employees contributing to the pension system, and fewer contributions put existing pensions at risk.
When fewer employees contribute while obligations to retirees continue, it adds to the long-term funding pressure on the system. This isn’t merely a hypothetical concern for me. New Jersey’s pension underfunding has already affected my retirement: teachers once received cost-of-living adjustments, but those adjustments were suspended to help reduce the system’s unfunded liability. As a result, my pension has no protection against inflation and loses purchasing power every year.
Myth #4: My Pension Was a Cost-Free Windfall
My pension is an earned benefit. I had to contribute a portion of every paycheck to it. My teacher salary was already meager, so those contributions meant I brought home even less net pay and had less money available to save and invest through other avenues.
For me, the pension was a trade-off for earning a low salary. I earned every penny of it. It wasn’t some sort of prize or lucky break. It was the result of 25 years of hard work in a very challenging career.
Myth #5: Because I Receive a Pension, I Don’t Need Any Other Financial Strategy
The reality is that my pension is one component of a system I’m designing to make my retirement work.
In addition to my pension, that system includes carefully controlled expenses, supplemental earned income from part-time or seasonal work, my future Social Security benefit, and plans for saving and investing.
The $36,000 pension is a big slice of the pie, but it can’t carry the entire workload on its own. And as I said earlier, even though the dollar amount remains the same, that slice will effectively get smaller and smaller over the years and decades as inflation reduces its purchasing power.
I hope it’s clear now that, even though not everyone has a pension like mine, the main idea of my story isn’t that I have a pension as a safety net to fall back on. It’s that I’m finding unconventional ways to make my retirement work and secure my financial future.
For more conversation on this and other early retiree topics, be sure to browse the playlists on my YouTube channel.
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