If I have a vested Pension, do I “need” a 401K too?

[peter1974]

We are buying a house and we used a portion of my 401K for down payment. I have $17K left in there and still contributing.

My wife expressed concerns about how this could impact our retirement. But I also have pension, for which I am vested (been with the company over 10 years).

I know it's optimal to have both, but I'm curious if anyone here has a pension, but little or no 401K?

[LakeLife]

Since I am a federal employee I have both, and I'd be crazy not to contribute to my 401k (Feds have TSP) due to the 5% match.  Having said that, I don't have as much in my TSP as I'd like due to a divorce 9 years ago and barely scraping by during the lean years afterwards.  I am slamming heavily into it now and have maxed out my contributions and will start contributing "catch up" funds next year at this time.  My reasoning is this:  I'd like to use my TSP to bridge the gap between when I retire with my pension and start collecting Social Security at my full retirement age.  I'll retire at 60 (only three blessed years away!) and will have a 7 year gap to bridge before I can maximize my SS benefit.  

IMHO, you should definitely take advantage of any match, and depending upon how much defined benefit pension you'll recieve plan accordingly.  Also, recently some pensions have not held up to the test of time and have been reduced, so that's something to keep in mind.  That benefit may not end up being what you think it will.  

[iced]

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@peter1974 wrote:

We are buying a house and we used a portion of my 401K for down payment. I have $17K left in there and still contributing.

My wife expressed concerns about how this could impact our retirement. But I also have pension, for which I am vested (been with the company over 10 years).

I know it's optimal to have both, but I'm curious if anyone here has a pension, but little or no 401K?

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My parents both have a pension but maybe $30k combined in a 401k/IRA and they also get Social Security. I would describe their situation as "scraping by" -- they have enough to live in retirement, but they're not doing much travel and living in a small home with 30 year old appliances. Their IRA is basically emergency funds, and being retired they have very limited ability to re-fill their savings should a large expense come along. If I could go back in time and advise them, I would tell them to put much, much, much more into retirement savings.

Unless you're living very comfortably and happily on your income today with money to spare each month, I'd expect a pension (with or without SS) to be insufficient.

[sxa001]

If your company is matching the 401K you should put as much in it as you can to maximize the match, if the match is 5% put in 5% if you can.  Even if you aren't doing a 401K you should be putting as much as you can comfortably into some kind of retirement savings.  I have also heard horror stories of people losing pensions or pension accounts being wiped out, personally I don't think I would count on any pension being there when I retired. 

[peter1974]

Thanks everyone for the feedback. I'll probably bump up my contribution after we close.

[jmw1]

You can't use your pension as a source of emergency funds in retirement.  You need a source of emergency funds.

You need to fund the 401k or Roth as much as possible. Certainly get the match but don't stop there if possible. If you can do the max plus catchup contributions, then do so. Go very lean or zero on all non-mortgage debt so you can throw as much as possible into retirement.