What is Better Social Security or a Pension?

Shawn Plummer

CEO, The Annuity Expert

Key Differences Between Social Security and Pension

Social Security:
  1. Government Program: Managed by the government, specifically the Social Security Administration.
  2. Funded by Payroll Taxes: Financed through taxes paid by employees and employers.
  3. Eligibility: Based on work history and contributions through taxes.
  4. Benefit Calculation: Depends on earnings history and age at retirement.
  1. Employer-Managed Retirement Plan: Offered by some employers, particularly in the public sector.
  2. Funding Sources: Typically funded by employer contributions, sometimes with employee contributions.
  3. Eligibility and Benefits: Vary depending on the employer’s plan rules.
  4. Benefit Calculation: Often based on years of service and salary history.

Why Combining Both Optimizes Retirement Income

  • Diversification of Sources: Combining Social Security and a pension diversifies income sources, providing more stability.
  • Supplemental Income: Pensions can supplement Social Security, especially if Social Security benefits are modest.
  • Covers Different Needs: Social Security provides a baseline income, while pensions can offer higher, job-related benefits.

Comparing Social Security and Pensions

FeatureSocial SecurityPension
Managed ByGovernmentEmployer
FundingPayroll TaxesEmployer and/or Employee
EligibilityWork History and TaxesEmployer Plan Rules
Benefit CalculationEarnings History and AgeYears of Service and Salary


Both Social Security and pensions are vital for retirement income, serving different but complementary roles. While Social Security offers a safety net based on work history, pensions provide employer-based benefits, often reflecting years of service and salary. Utilizing both maximizes retirement income security. Contact us today for a free quote for personalized advice on retirement planning and optimizing your income with Social Security and pensions.

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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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