How Much to Save for Retirement if a Spouse Has a Pension?

A pension can be one part of retirement savings.

Old couple sitting on a bench, watching at the landscape image by Eric Isselée from

A pension provides you with a set payment each month after you retire. Depending on the size of the pension, when you combine these funds with your monthly Social Security benefit, you may have enough to live on during retirement. But each person’s financial situation is different. If your spouse has a pension, you should sit down together and examine your situation to determine how much more, if any, you’ll need to save to provide for your expenses after you retire.

How Much Do You Need?

The United States Department of Labor reports that most people need about 70 percent of their pre-retirement income to maintain their same standard of living in retirement. But you could need as much as 90 percent if you earned less during your working years or you have extraordinary expenses. For example, most retirement scenarios assume a paid-off home; if you have a mortgage, you’ll need enough to cover those payments. If you have a lot of medical expenses or you want to indulge in expensive hobbies, you’ll need more money to pay these bills. You can use an online calculator to estimate your living expenses during retirement.

Social Security Benefits

If you’ve paid into Social Security during your working years, you and your spouse will receive monthly Social Security benefits. You can see an estimate of your projected monthly benefit from Social Security. The online form allows you to see the benefit you’ll receive at different retirement ages, as well as your spouse’s estimated benefit. Federal and state employees who didn’t pay into Social Security can learn similar estimates of their benefits under federal and state retirement plans. Add these estimates to your pension amount and subtract from the money you estimate you’ll need during retirement to determine how much additional you should save. The actual amount you will receive when you retire depends on your age at retirement, your contributions and benefit limits set by Congress.

Pension Benefits

Your pension administrator should be able to provide an estimate of the monthly pension benefit your spouse will receive after retirement, as well as the amount you could expect if your spouse dies before retirement. Some pensions also offer the option of receiving your benefit in a lump sum, to invest as you wish. Though the federal Pension Benefit Guaranty Corp. provides protection for pension benefits, benefits can be reduced or frozen if necessary to keep the fund from going bankrupt, so you could receive less than the estimated benefit when it comes time for you to retire.

Other Considerations

Relying on your spouse’s pension benefits to pay for retirement carries some risks. If you divorce, you may or may not be entitled to part of those pension benefits. Shortfalls in funding for Social Security or reductions in pension benefits could reduce the amount of income you can count on receiving in retirement. Putting aside some savings in retirement in your own IRA or 401(k) provides a financial cushion in the worst case and more money to enjoy during retirement in the best case.