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August 31, 2011 at 08:00 PM
A defined benefit pension plan really can be important to protecting a middle-income or even relatively high-income retiree against falling into poverty.
Having pension benefits in the top 25% reduces the likelihood that a low-income worker will be unable to pay health care costs and basic living expenses in retirement to about 45%, down from about 85% for low-income workers with no pension benefits.
For a high-income worker – one with income in the top 25% — having pensions in the “highest quartile” reduces the likelihood of having inadequate income in retirement to about 5%, from about 25% for high-income workers with no pension benefits.
Jack VanDerhei, a researcher at the Employee Benefit Research Institute (EBRI), Washington, has published those estimates in a study conducted using the EBRI Retirement Security Projection Model.
