Many public safety professionals reach retirement with two distinct kinds of resources: a defined-benefit pension and personal savings such as a 457(b) or IRA. This article explains, at a conceptual level, how these differ. It is educational only.
A Defined-Benefit Pension
A defined-benefit pension pays a monthly benefit determined by a formula -- typically based on years of service and a measure of salary. The payment is defined in advance by the formula rather than by an account balance.
Personal Savings
Personal savings accounts hold a balance that the individual and their employer may contribute to over time. The eventual value depends on contributions and investment results over the years.
Why People Think About Them Differently
Because a pension provides a formula-based monthly amount and personal savings provide a balance, people often consider them as complementary parts of a broader picture. Neither this article nor Mathis provides individualized recommendations here.
This resource is educational only and does not constitute financial, tax, or legal advice. Program rules are defined by the official plan documents. For guidance on your individual situation, please consult a qualified advisor.