In working with retired parents and their adult children, I’ve grown used to the comment that children have about how they “wished they had a pension like Mom or Dad had.”

This condition that I call “pension envy” is due to the perception of having the “safety net” of a pension, or defined-benefit retirement plan, rather than a 401(k)-based retirement plan that provides no “defined benefit” and takes that plan participant on a roller-coaster ride of market fluctuations. The allure of the pension was also due to its ability to clearly define what a person would earn when they retire, something that’s difficult to do with plans like 401(k)s.

However, the pension option that made up the sole retirement plan for so many in past generations, has disappeared for the majority of Americans. Being “on your own” with 401(k) plans and IRAs have become the replacement models for retirement plans as companies moved away from pension plans and placed those retirement responsibilities onto the workers. In reality, these options have allowed for greater investment flexibility and for many, higher returns and larger nest eggs than they would have had in a pension.


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