Publications

Is your pension enough?

Posted on March 13, 2025

Your retirement needs are unique. Not unlike your family tree that can show you where you got your brown eyes and curly hair, you also have a pension DNA. Unfortunately, there isn’t a money tree you can reference for personal financial matters but there are ways to estimate what you’ll need in retirement. There’s no need to be left worrying if your pension is enough.

How much retirees spend on average

It’s a good idea to compare your retirement outlook to what average retirees are spending. This can give you a ballpark of what your own situation might look like. The website for the Bureau of Labor Statistics surveys retirees. In 2023, the latest year for which data is available, households of those who were 65 or older spent an average of $64,326. Although this is the average across the U.S., we all know that inflation since 2023 has most likely increased retirees’ expenses; inflation should always be a factor in your overall financial considerations.

While the U.S. average is a helpful factor to consider, it’s important to look at your own potential spending sources in your retirement years; many factors like these have changed in the past few decades:

The average age of first-time parents has increased, meaning many people could still have expenses for raising children or paying college tuition in their retirement years.
The cost of housing has increased along with the average age for homebuyers. If the trend continues, retirees may still have a mortgage.
Other factors to consider include a careful examination of additional retirement income, including personal savings.

Review all your financial resources

Most people think of Social Security and personal savings as part of their retirement portfolio. However, recent news has not been favorable for the stability of Social Security funds in the not-so-distant future, and personal savings are dwindling in the face of inflation. In fact, according to the Social Security Administration’s 2024 financial report, fund reserves are projected to become depleted in 2035.

But this is where the state’s Deferred Compensation Program (DCP) comes in to help. Investing your dollars into DCP could ease your Social Security and inflation worries. If your employer offers DCP (ask them!), it can be an excellent retirement savings opportunity. Not only can you set aside additional funds for retirement on top of your pension, you can also maintain investments that will continue to grow—even into your retirement years.

DCP advantages

It’s easy

Contributions are automatically deducted from your paycheck, so saving is easy. Start with as little as $30 per month. You can also let your contributions grow with percentage deductions.

It’s flexible

Online or by phone, you can change your contribution amount and investment selections at any time. Your changes can take up to 30 days to go into effect (depending on your employer’s payroll cycle).

It’s smart

DCP offers a variety of professionally managed investment options, including “one-step” funds that automatically rebalance the asset mix as you move toward your target date for retirement. Funds are selected by the Washington State Investment Board, with fees among the lowest in the marketplace.

You can roll qualified funds into DCP

DCP can accept roll over funds from your previous employers if those funds are held in eligible retirement plans such as 457(b), 401(k), 403(b) and traditional, pretax IRA accounts. However, the IRS prohibits rolling Roth IRAs into DCP.

Rolling funds into DCP requires two steps: