In most cases, a person does not start to receive a pension until he reaches 65, which is the age of retirement, notes CNN Money. There are several pension plans that permit the individual to start drawing from his pension as early as age 55. Those who decide to draw early before reaching retirement age do not receive as much from their monthly payouts as they would if they waited until reaching 65.Continue Reading
Pensions should be but one segment of an individual's retirement plan, according to CNN Money. It is highly unlikely a single pension plan is enough to cover all of a person's expenses for the entirety of his retirement. If an employer offers a pension plan, there is also a chance employees can take advantage of 457 or 401(k) plans, which work by deducting a percentage of the employee's pay and setting it aside in a tax-deferred investment account. These plans might also include a matching employer contribution.
Pension plans are more common with government agencies and companies with sizable unions, explains Miriam Caldwell for About.com. An employee is more likely to remain with a government agency or company with a large union longer than another type of employer or company. Since the 1980s, 401(k) plans have become more commonplace.Learn more about Financial Planning