Do You Need a 401K if You Have a Pension?

Shawn Plummer

CEO, The Annuity Expert

The Role of a Pension in Retirement Planning

  • Pensions provide a steady income stream in retirement.
  • Often seen as a foundational element of retirement income.

Benefits of a 401k with a Pension

  • Offers additional savings and investment options.
  • Can increase total retirement income.
  • Provides flexibility in retirement planning.

Alternatives: Nonqualified Deferred Annuities with GLWB

  • Function similar to pensions but with tax advantages on gains.
  • No contribution limits, unlike 401k plans.
  • Often include protection from stock market losses.
  • Guaranteed income for life with potential interest earnings.
  • Options for increasing income to counter inflation.
  • Benefits may extend to spouses and include a lump sum death benefit.

Reverse Engineering Retirement Goals with Annuities

  1. Define Retirement Income Goals: Determine the desired income level for retirement.
  2. Utilize Annuity’s Contractual Guarantees: Plan the path to achieve these goals based on the annuity’s features.
  3. Forecast Retirement Timing: Align your retirement age with income goals and annuity benefits.

Comparing 401k and Annuities

  • Contribution Limits: 401ks have annual contribution limits; annuities do not.
  • Taxation: 401ks tax withdrawals as income, while annuities tax only the gains.
  • Market Risks: Annuities may offer more protection against market volatility.
  • Income Stream: Both can provide a steady income, but annuities offer guaranteed lifetime withdrawals.


While a pension provides a stable foundation for retirement, incorporating a 401k or a nonqualified deferred annuity with GLWB can significantly enhance your retirement security. These tools offer different benefits and can be tailored to meet specific retirement goals and preferences. Understanding their unique features and how they complement each other is crucial in planning a comprehensive retirement strategy.

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Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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