There has been talk for decades about the possibility of the Social Security trust funds running out of money. While earlier conversations may have seemed like theoretical discussions about a distant future, the clock is now ticking loudly.
The Old-Age and Survivors Insurance Trust Fund, which pays out retirement benefits, will be depleted in 2033, according to the 2025 Social Security Trustees Report. An analysis by the Committee for a Responsible Federal Budget pegs the depletion date a year earlier, in 2032, due to provisions of the One Big Beautiful Bill Act. Either way, retirees can expect a 22% to 23% reduction in benefits.
Many finance experts feel confident that Congress will act before the trust funds run dry, but some workers are understandably nervous. In the face of reduced government benefits, a pension may seem like a nice safety net.
“Retirement is not net worth,” says D’Andre Clayton, owner of Clayton Financial Solutions in Greensboro, North Carolina. “Retirement is income.”
A pension can provide that income. In exchange for working a certain number of years, an employer will make regular payments to someone with a pension throughout their retirement.
It sounds good, but “How realistic is it?” asks Chris Briscoe, director of financial planning for Girard, a Univest Wealth Division in King of Prussia, Pennsylvania. “I’m just not sure.”
Here’s what you need to know about where to find a pension and what to do if it isn’t right for you.
[Read: What Would It Mean If Trump Privatized Social Security?]
Pensions: Largely a Public Employment Perk
Traditional pensions, more formally known as defined benefit plans, were long a staple at many U.S. corporations. The first employer-sponsored retirement plan in the country was offered by American Express in 1875, according to a report published by the Bureau of Labor Statistics.
By 1980, nearly 40% of private workers had access to a defined benefit plan, according to the Social Security Administration. However, as people lived longer and companies sought ways to cut costs, the defined benefit plan gave way to defined contribution plans, such as 401(k) accounts.
In 2023, the most recent year for which data is available, only 15% of private sector workers had access to a defined benefit pension plan, according to the BLS. Of those, workers employed in financial activities are most likely to have access, with a third of these employees given the option of a traditional pension benefit.
While finding a private sector job with a pension may be difficult, these retirement plans are still common in the public sector. A 2022 report from the BLS found 86% of state and local workers had access to a defined benefit plan. These workers include teachers, firefighters, police officers and other government agency employees.
[Read: 401(k) Mistakes Job Hoppers Make.]
Things to Consider Before Switching Jobs for a Pension
Before you give up your current job for one with a pension, consider any potential trade-offs.
“Traditionally, those employers with defined benefit (pension) plans aren’t big payers,” says Steve Parrish, professor of practice at the American College of Financial Services. Rather than sacrifice pay for a pension, “You could find a job that has a 401(k) and a really nice 401(k) match,” Parrish suggests.
You should also consider whether a job with a pension will be to your liking.
“Do you even qualify and are you going to be happy in a job like that?” Briscoe asks.
He notes that some jobs with pensions, such as firefighting and manufacturing, can be physically demanding and could affect the long-term health of workers. That’s another trade-off to consider before making a career change.
Finally, note that pensions have a vesting period. You may have to work a certain number of years before you even qualify for retirement benefits. And if you only work the minimum number of years, you may find your retirement benefit is small. For this reason, seeking a job with a pension may not be beneficial for older workers.
[Read: How to Tell if You Have a Lousy 401(k) Plan.]
Other Options for Retirement Income
Workers who don’t have a traditional pension can find other ways to bridge the gap in their finances should Social Security benefits be reduced.
“They don’t necessarily need a retirement plan; they need money,” Clayton says.
The following are a few ways to get that money.
Annuity
If you don’t have a pension at work, you could create one yourself with an annuity. In exchange for a lump-sum payment, this insurance product will provide lifetime income. Workers may even be able to set up an annuity within their 401(k) account thanks to the Secure Act, Parrish says.
Some annuities provide a flat fixed payment while others may be adjusted for inflation each year. Clayton notes that income annuities should typically be given several years to build value before withdrawals begin.
Not all annuities are created equal, and you should work with a trusted advisor to determine if and what kind of annuity might be right for you.
Reverse Mortgage
A reverse mortgage is another way to create a steady stream of income in retirement. Only available to those age 62 or older, a reverse mortgage provides payments to homeowners based on the equity in a home.
“It gets a lot of bad press because of anecdotal stories,” according to Clayton.
Once a homeowner moves or passes away, the amount paid out by the reverse mortgage must be repaid. That often means the home must be sold, which is one reason why these mortgages can be unpopular.
To avoid this scenario, Clayton says homeowners may be able to purchase life insurance that can be used to pay off the reverse mortgage balance and preserve a family home after they die.
Additional Savings
Workers concerned about a potential future drop in Social Security benefits should work on shoring up their finances now.
“It’s important for people to take it upon themselves to prepare,” Briscoe says. Budgeting and saving are important tasks, regardless of what the future may hold.
Workers age 50 and older are entitled to make catch-up contributions to their retirement accounts to help them build a bigger nest egg. For 2025, catch-up contributions are an additional $1,000 for IRAs and an additional $7,500 for 401(k) accounts and similar retirement plans.
Continue to Work
Those nearing retirement may want to consider working longer, while those already in retirement could take a part-time job to supplement their savings. Either way, every month you continue to work adds to your Social Security benefit amount, Parrish says.
Also, don’t overlook the opportunity to optimize your pension if you have one, Clayton says. Perhaps you spent a few years in a government job early in your career, but later moved into the private sector. Going back to that government role could provide additional income and years to boost your pension payment under the plan’s formula.
More from U.S. News
How Raising the Retirement Age Could Help or Hurt Seniors
How Much You Will Get From Social Security
10 Places to Retire Abroad on Social Security Alone
With Social Security Benefits at Risk, Should You Find a Job With a Pension? originally appeared on usnews.com