Pensionless – The 10 Step Solution for a Stress-Free Retirement – Book Review

 

 

The Book Review Series

 

 

A recent visit out of town allowed me to visit a used bookstore – and it yielded some impressive finds – this book, Pensionless, was one of them.

I saw it on the shelf, took one look, and decided it was worth the read.

Man, was I right.

A lot of people don’t know this, but the initial reason I started this website was to share what I learned about researching retirement. Now, it has evolved to become SO MUCH MORE – but when it started, this book is precisely what I had in mind.

Well, sort of. The premise of Pensionless is how to approach, prepare for, and deal with retirement when you do not have a pension. That isn’t my situation – but the research has some applications for those who, in fact, do have a pension. In any case, I was intrigued to see what the author recommended, and what follows is a review of this interesting book.

 

Introduction

The author opens up by discussing what she calls The Golden Age of Pensions:

“In 1980, about 39 percent of the labor force had a traditional pension plan, according to Department of Labor data. The number of traditional pension plans peaked in 1983 at more than 175,000. These pensions provided retirement security for millions of workers. With a pension plan, once you meet the appropriate age and number of years on the job, you can retire knowing that your former employer will provide your monthly payments from your retirement date onward.” – Page 7

“In their place, the 401(k) plan has risen as the new predominant workplace retirement benefit. As of 2015 some 61 percent of private industry workers had the option to participate in a 401(k) plan or similar type of workplace retirement account. However, only 43 percent of employees actually used the plan.” – Page 8

The rise of the 401(k) has shifted the burden of ALL risk from the employer to the employee – along with the responsibility to contribute, monitor, and keep track of your fees, investments, and market ups and downs. You bear the brunt of everything, and given the current inflation, fewer people believe they can actually save any money for their retirement.

Therefore, realize that this book is written from the perspective that you do NOT have a pension plan. Whether you do or not, the rest of the chapters have some good advice we all could learn from.

Acknowledging the lack of a pension plan makes retirement more difficult, the author writes, “The deck is stacked against you, but you can still play your best hand.” – Page 9

 

Pensionless Step 1: Maximize Social Security

 

What the author means when she says “pensionless” is a pension that IS NOT Social Security.

For those who do not know their financial terms, Social Security is, in fact, a defined benefit – or a “pension.” Moreover, it is a pension that is nationwide – and outside of a select few (government employees under CSRS and railroad workers under RRB, are a couple of examples), everyone is paying into and subsequently will get in retirement.

As such, it is the premier benefit that most Americans rely on when they retire.

“The vast majority of those who are retired (86 percent) receive income from Social Security. The program provides at least half of the retirement income of 65 percent of retirees, and more than a third receive 90 percent or more of their retirement income from Social Security payments.” (emphasis mine) – Page 11

That is A LOT of people whose only retirement security comes from a program that was never intended to be the sole retirement account. What’s more, when Social Security was enacted back in 1935, there were naysayers against it. Imagine that.

This chapter is rather robust, and the author takes her time in explaining many of the nuances that make Social Security seem daunting: From retiring/claiming it early, delaying it, spousal benefits, survivor benefits – and even some strategies when it comes to building/boosting, it’s informative.

We leave this chapter with 3 things I found interesting:

1. The average used by Social Security is 35 years. If you work less – say 30 years – they will add up the yearly income for the 30 and zeros for five years, bringing down your monthly payment.
2. According to the Social Security Administration, by 2041, the trust fund will run out of surplus. After that, they are running on an exchange – taxes coming in, and payments going out. There are lively discussions as to how to deal with this, but like anything else, the cogs of the government turn slow.
3. Once you reach Full Retirement Age (FRA), you can collect your full Social Security pension AND work all you want.

Things are always subject to change, and with structural issues set to happen to Social Security, I’d say we will see some. Which ones, though, is anyone’s guess.

Interesting chapter and worth the read.

 

Pensionless Step 2: Make the Most of Medicare

 

Ahh, the health insurance of retirement. This chapter is the right hook to Social Security’s left jab. What’s more, it is another government program just about everyone pays into:

“Almost all working Americans pay into the Medicare system. Most workers contribute 1.45 percent of their earnings to the Medicare trust fund, and companies pay a matching 1.45 percent for each employee.” – Page 29

Oh, by the way, if you are reading this and pay the whole 2.9 percent yourself, you are self-employed.

BE AWARE, THOUGH: If you are reporting to work, are dictated what to do, where to work, and treated like an employee – and not like you own your own business or are an “independent contractor” – YOU ARE BEING EXPLOITED. The company you work with (or for, to be blunt) is misclassifying you, and you should be aware. If you need to talk to someone about it, feel free to drop me a line, and I’ll do what I can to get you connected to whoever I believe will be able to help.

Back to your regularly scheduled chapter review

Medicare seems confusing – and everyone I’ve known talks about it, too. There are parts A, B, C, and D, certain times to enroll, and various increases in premiums if you don’t sign up when you are supposed to.

“If you’re already receiving Social Security benefits, you will automatically get Medicare Part A and Part B starting the first day of the month you turn sixty-five.” – Page 31

What if you decide to wait until 70 to take Social Security? Does Medicare cover Eyeglasses, Dental, and Hearing Aids? (Spoiler alert: it doesn’t).

Do your research – and if you’re close to retirement, read this chapter. Otherwise, you could probably skip it.

 

Pensionless Step 3: Boost Your 401(K) Balance

 

“401(k) plans are now the predominant form of workplace retirement benefit. These savings accounts allow you to defer paying income tax on the amount you contribute until you withdraw the money from the account…401(k) plans are often referred to as defined contribution plans, because you and your employer are each free to decide how much to contribute to the plan and can elect to change that amount at any time. The benefit you will get from a 401(k) plan in retirement is not guaranteed, and 401(k) accounts can lose value when the investments you select decline.” – Page 45

Ahh, the ubiquitous 401(k). It’s amazing that a line item in the IRS code should become the most popular retirement account: “401(k) plans get their name from the Internal Revenue Code that created these accounts in 1978…Companies flocked to 401(k) plans because they are a less costly form of retirement benefit for employers to fund, and the employer doesn’t have ongoing responsibilities to provide income to former employees.” – Pages 45, 46

I’d also add that employers went from fully funding pension plans to selectively funding 401(k) plans – and when you couple that with the significant offshoring that has taken place since its creation, that has added A LOT of wealth to companies. Less risk, less investment, less pay, less concern, and less value – and more money for us?

Where do we sign up?

In the long run, however, it’s a bit of a catch-22. The resulting shift has left numerous Americans without adequate retirement savings. AND, if you’re reading this and think it doesn’t impact you – think again.

The reason?

Because when you go to retire, you are either a contributing citizen to the economy or you are a drain – one or the other – there is no in between.

The government knows this, too. It’s why they make 401(k) plans tax-deferred (meaning you pay taxes later, in retirement on the money), consider legislation like the SECURE Act 2.0, and try to incentivize employers to contribute, too.

Current recommendations are to invest like you pay taxes: before you see your money.

“Contributing to a 401(k) via payroll deduction is one of the most convenient ways to save for retirement. The money never hits your checking account, so it’s not easy to spend it.” – Page 48

The author offers this tip knowing it works for taxes and could work for your 401(k), too. I’d only add that if you got your whole check, and THEN had to pay taxes, we’d see more pissed-off people.

From getting employer matches, looking for new jobs, what to do with your 401(k) when you leave a company, how to avoid excessive fees, penalties, and how to boost savings – it’s here in this chapter.

Lastly, while the first two chapters were for everyone, this chapter has little to nothing for most union members. The vast majority of union members I know have a main retirement account (pension) and a supplemental retirement account (annuity fund). For simplicity, annuity funds are VERY SIMILAR to the 401(k) retirement funds of today – with a few differences.

 

Related: Read What About Annuities?

 

 

Pensionless Step 4: Invest in an IRA

 

Individual Retirement Accounts (IRAs) are one of the only retirement accounts available to everyone.

“Tax deductible IRAs were created in 1974, and were initially only available to employees without pension plans at work…A 1981 law expanded IRAs to all taxpayers with earned income, and increased the contribution limits to 100 percent of earnings or a maximum of $3,000. Income limits for participation were added in 1986, and have since been increased several times.” – Page 65

The current contribution limit for the year 2025 is $7,000, and if you are over 50, you can contribute $8,000. What’s more, you could even open an IRA for a child, BUT the qualifier for contributing is that you have earned income – including children.

Another point the author brings up is the decision of whether to save for retirement or save for your children. Not to hijack the section, but I couldn’t pass up the opportunity to offer the following:

First, I believe it is a preposterous culture that simply assumes that it’s the responsibility of a parent to pay for a child’s college tuition. Taking it a step further, it’s a bit presumptuous that someone is automatically going to go college in the first place. The idea that we must do these things has been interwoven into society and it needs a hard reset. If, as the author contends, the deck is stacked against you, then we should spend more time saving and not buying into the cultural lie that “you have to go to college to get a good job,” or even that you have to go in the first place.

You’re better off teaching your kids to recognize pattern recognition, pursue opportunity for all it’s worth, and save for retirement in all the various vehicles available to them.

The author also notes that while there are similarities between the 401(k) and the IRA, there are differences, too.

The last thing to point out is that IRAs are not linked to your job, have more investment options, and as such, many people roll over other investments into them. And, you could be one of them.

Open an IRA if you don’t have one already, and check this chapter out.

 

Pensionless Step 5: Add Tax Diversification with a Roth Account

“Adding tax diversification to your portfolio gives you more control over how and when you pay taxes in retirement. In addition to traditional retirement accounts, you may want to consider putting money into Roth accounts. These don’t give you a tax break up front, but the money grows without the drag of taxes, and withdrawals in retirement can be tax-free.

Roth IRAs were created by the Taxpayer Relief Act of 1997. The accounts are named after Senator William Roth Jr. of Delaware, who was an advocate for the bill. Since 2006, 401(k) plans have been allowed to amend their plans to add a Roth 401(k) option.” – Page 79

The author points out something that many do not consider when it comes to retirement: diversification.

For my part, I believe EVERYONE that can should have a Roth IRA. This includes every single skilled tradesman out there.

 

Related: Read Why I chose a Roth IRA

 

One of the main reasons is the treatment of taxes. We make assumptions about what taxes will be like when we retire, but do we really know? Moreover, if you have a 401(k) or an annuity fund through collective bargaining, most of the money there is tax-deferred – and when you retire, it’s time to pay the IRS. They want their pound of flesh.

But if you pay your taxes now – when you know what the actual rate will be – you are diversifying your income in retirement. You’ll have a mix of tax-free and taxable accounts, and, for my part, I believe that to be the best strategy.

“The earnings can continue to grow tax-free until you decide to withdraw the money, or you can use Roth accounts to pass on tax-free money to your heirs. You contribute after-tax dollars to Roth accounts, but the investment earnings aren’t taxed while the money is in the account, and you can also take tax-free distributions from the account in retirement.” – Page 80

In other words, the Roth IRA is a gem.

The author also notes that the government places earning limits on who can contribute to a Roth IRA; meaning, if you make too much money, you could be ineligible. You can also read more about it here.

There are several other benefits the author points out that make this chapter a must if you are going to get/read this book. For what it’s worth, I cannot recommend a Roth IRA enough.

 

Pensionless Step 6: Minimize Taxes Before and After Retirement

 

“The tax code has a variety of incentives to encourage retirement savers.” – Page 95

The author begins this chapter with the above, and the reason is something I’ve already alluded to: you either add to or take away from the economy when you retire. It’s better for all involved if you save and contribute in those later years.

For this chapter, she covers several different ways to address taxes – perhaps more prominently, where to prioritize your savings. For example, few people have enough money to FULLY contribute every penny they can to retirement accounts, especially if they have a 401(k).

Where do you prioritize? The author first mentions getting whatever you can from employer matching in your 401(k) first, then shifting over to your IRA – whether traditional or Roth for greater investment options.

Depending on what you invest in, you could find yourself facing varying tax rates – pay special attention.

The author also points out something many seem to miss when heading into retirement:

“If you have amassed a significant nest egg and aren’t careful, taxes could become one of your biggest expenses. The money that wasn’t taxed on its way into a retirement account will be taxed on its way out. The catch of tax-deferred retirement accounts is that you will owe tax on that money in retirement, at a time when you are trying to make your existing savings last as long as possible.

The money you have in tax-deferred 401(k)s and IRAs [and Annuity funds for those who are union] doesn’t completely belong to you. You have to pay tax on each withdrawal.” – Pages 101, 102

There are other important bits of information the author points out that make this chapter worth reading – especially if you are closing in on that important date.

Lastly, she mentions that when you have to pay taxes, it might be to your benefit to consider one of the states that do not have income tax as a way to lower your tax burden. In 2025, those states are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.

 

Pensionless Step 7: Cut Costs and Fees on Your Retirement Investments

 

“Fees are one of the biggest destroyers of your retirement savings, especially when compounded over the course of your career. However, it’s likely that many of the investment costs you are paying are avoidable…You can’t control how your investments will perform, but you can control how much you pay to own them.” – Page 117

This chapter has a wealth of information in the form of tips and tricks that I recommend you read to gain a better understanding of what the author presents. However, there are a couple of items that jumped out at me while reading.

“A fee-only financial planner who charges a flat fee or hourly rate has no incentive to recommend high-cost funds because his or her compensation does not change based on the investments you select.” – Page 121

Great advice, here. If you are genuinely looking for someone to help navigate you through the complexity of retirement, I suggest you listen to the author and get a financial planner who is considered a “fiduciary.” In this case, you are paying up front for time from this person who has a legal responsibility to offer you the best advice – not try to sell you something they may gain a commission on.

I wouldn’t recommend something I don’t do myself – I have used a fee-only financial planner before and will again.

“While it takes a little effort to seek out a fund with low costs, the payoff over time can be huge. Once you set up a low-cost retirement account, you can let automatic deposits and compounding investment returns take care of the rest of the work for you.” – Page 126

Do you know what that sounds like? Intentionality – there’s that word again.

 

Pensionless Step 8: Control Your Housing Costs

 

“Housing is likely to be your biggest expense throughout your lifetime. Retirement offers you unique opportunities to reduce your housing costs. Your home can be used to reduce your retirement spending and even give your nest egg a quick and significant boost. You can often greatly improve your retirement finances if you are willing to pay off your mortgage, downsize your home, or move to a place with a lower cost of living.

Paying off your mortgage is one of the biggest ways to improve your retirement finances. Owning a paid-off house eliminates one of your biggest monthly expenses, because you will no longer need to make mortgage payments or pay rent. You will be able to live comfortably on a much smaller budget once you own your home mortgage-free.” – Page 129

Do you know who else advocates for this? Dave Ramsey. Imagine if you had $2,000 (or more) extra EVERY month because you are mortgage-free. That sounds great, doesn’t it?

Yea, I thought so.

You could also consider downsizing or even relocating – both options for you like never before.

The author points out additional possibilities: sharing your house with a roommate, multigenerational housing, or even retiring abroad. The Mad Fientist, who writes about Financial Independence Retire Early (hence the FI), also discusses this – although he calls it geoarbitrage.

Two other things jumped out at me from this chapter:

“It can add joy to your life to retire near your children and grandchildren. Family members might include you in social events and prevent you from becoming too lonely in retirement, especially if your spouse passes away.” – Page 139

“You’ve probably spent years tinkering with your home and garden to get things just the way you like them, and you will need to start that process over in a new place. Better weather and a couple of tax breaks might not be worth leaving your friends and family members behind. It could take years to set up a social network in a new place and find all the services you need, especially without the connections people make at work. Sometimes the best retirement spot is the one you already know and love.” – Page 143

In a world full of how to earn, save, and squeeze more money out of things, I am pleased the author rounds out this chapter with something I bet millions of us cannot place a dollar amount on.

 

Pensionless Step 9: Reduce Your Cost of Living

 

“You may be able to retire sooner if you are willing to reduce the amount you spend each month. Cutting expenses before retirement frees up cash to add to your savings. Also, if you become comfortable living that more frugal lifestyle it reduces the amount you need to save for retirement, because a smaller nest egg will be adequate to pay your retirement bills.

You can further reduce your costs when you are able to ditch work…But it’s equally important to budget for new costs in retirement. – Page 145

The author hits the nail on the head with this one. When you retire, you are trading one set of expenses for another a lot of the time. Or, if you prefer, the ability to spend your money elsewhere.

You may want to travel – people in retirement will have ample time to explore now that they are retired. It could be visiting relatives. Perhaps it is entertainment like golf or swimming. You may even find yourself spending more on medical (in fact, most retirees will). All of these are where your spending will likely shift in retirement.

What are you leaving behind when you retire? Costs like traveling to work, work clothes, and even convenience.

 

Related: Read Convenience: How Much Are You Willing to Pay?

 

I’d only note here that the author is rather specific when she’s talking about work clothes – slacks, shoes, suits – ALL FROM THE OFFICE ENVIRONMENT. Not that there’s anything wrong with the office; however, there is a complete sector of the workforce that is often sidelined in active discussions everywhere – and in this case, it’s retirement.

Other words of wisdom discuss how to approach children and grandchildren (many a retiree found themselves spending too much money on others when they needed to be more cautious about money), along with proper planning – or, rather, estimating how long you should expect to live.

 

Pensionless Step 10: Reinvent Your Life

 

For my part, I think this was the best chapter in this book. It covers a myriad of topics that retirees will face – and it’s far more comprehensive than just money.

“Retirement isn’t simply about hitting a number in your bank account. It’s the beginning of a new lifestyle that doesn’t involve going to work every day. You get to tell your boss that you just aren’t going to come into work anymore…Some colleagues who didn’t save enough for retirement may envy you as they face the years of work ahead of them.

Retirement is a beginning…It can be a shock to realize that you weren’t vital or necessary to the functioning of the company. They probably will get along just fine without you…Many people see retirement as a relief and an escape.” – Page 159

Here, here. The author spends this chapter navigating through some of the challenges you face during this time – from unexpected and early retirement to health problems and job loss – and even possible part-time jobs that pique your interest. She does a good job of helping people see some of the things they may not think about.

Other talking points I found note-worthy:

“While finding a way to pay for retirement is important, the experience of retirement is about finding meaningful ways to spend your time. You can choose to stretch out your days relaxing or fill your days with hobbies and volunteer work. You might pursue both during different parts of your retirement.” – Page 169

“It’s possible you’ll have so little to do in retirement that you’ll become bored.” – Pages 169, 170

Here at The Wealthy Ironworker, we talk about setting goals often. Otherwise, you simply meander through life – and this includes retirement, also. The author speaks of hobbies, and we heartily concur. The number of skilled tradesmen I’ve seen dwindle away after retirement because they didn’t have anything in their life but work is TOO MANY.

Explore hobbies during the entire course of your life – that, and pouring into others, helps to give you purpose.

Lastly, the author ends the chapter with a stellar point, saying, “Some retirees aim to leave a financial legacy for their children or a desired institution or charity…You can write an autobiography, compose letters to your children or grandchildren, or collect and organize family photographs and properly label them.” – Page 173

Kudos are due to her for ending this chapter with a noble discussion. This chapter alone is worth the book.

 

Appendix C: How to Get a Pension

 

I have included this appendix section for the simple fact that although the title of the book is “Pensionless,” there is a section devoted to pensions and how you can get them.

It’s interesting – corporate America has, in their desire to boost profits, abandoned the pension model, but Americans lament this loss. What’s more, a growing number of employees, some companies, retirement professionals, and actuaries are advocating for lifetime income options to attract and retain employees. You can check out other articles here, here, here, and even here.

Do you know what that is? IT’S A PENSION! Now, how about that? My, how we’ve come full circle.

There’s a lot of interesting information she has listed in this chapter, and I won’t endeavor to write about a lot of it here, BUT there are one or two points worth mentioning.

For example, she advocates joining a union – precisely what we here at The Wealthy Ironworker advocate for, too.

“Unions negotiate with company management for better retirement benefits for their members. That’s why 72 percent of union members continue to enjoy traditional pension plans, compared to just 13 percent of nonunion employees. Collective bargaining for better retirement benefits often yields better results than negotiating on your own.” – Page 191

AND THERE YOU HAVE IT – SOMEONE ELSE REMOVED FROM ORGANIZED LABOR ADVOCATING FOR IT!!

I’ll wrap things up here. In the meantime, if you are in the trades and looking to improve your situation, feel free to contact me and I’ll get you in touch with whoever to help.

 

Conclusion

 

All in all, this is a good book, and if you want an easy and informative read, it’s worth adding to your library.

If you aren’t near retirement age, however, or you’re in the trades, you may be better off doing your own research, reading The Wealthy Ironworker, and consulting a financial professional who is a fiduciary. There are A LOT of variables when it comes to retirement, and things can (and likely will) change.

Do your research, and don’t let retirement just happen to you; be intentional, set goals, and set yourself up for success.