How Does a Pension Affect the 15% Retirement Rule?

Summary

Ramsey Everyday Millionaires – Episode Summary

Episode: How Does a Pension Affect the 15% Retirement Rule?
Date: July 15, 2026
Hosts: Ramsey Network hosts (featured: Dave Ramsey)

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Main Theme & Purpose

This episode addresses a practical retirement planning question: how should a mandatory pension contribution factor into the recommended "15% of income" retirement investing rule? A caller seeks clarity on whether her required pension payments can be counted toward her 15% retirement savings goal. Dave Ramsey unpacks the nuances of pensions, control over investments, and how best to ensure a financially secure retirement.

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Key Discussion Points & Insights

1. The Caller’s Situation

• Bridget from Chicago is a former teacher, now an administrator.
• She is required to contribute 9% of her salary to a pension plan; this contribution is mandatory.
  • [00:21–00:38]
    • Bridget: “So I’m...fully funding my pension. And my contribution is 9% mandatory...should that 9% be included as a part of the 15% that should be towards retirement?”

2. Should a Mandatory Pension Count Toward the 15% Rule?

• Dave Ramsey breaks it down:

  • There are two main issues with pensions:
    1. Lack of Control: The participant cannot choose investments or manage the fund’s direction.
       • [00:49]
         • Dave: “One is you don't have any control over what it's invested in. The outcome...is totally up to someone else.”
    2. Conservative, Lower Returns: Pensions are “heavily regulated” and tend to be conservatively invested, leading to lower projected returns (about 7% average).
    3. Credit, but Not Full Credit: Ramsey suggests giving partial credit to required pension contributions toward your overall retirement investing percentage.

• Quote & Advice:

  • [01:05]
    • Dave: “I would take your 9%. I would count about half of it. So if we want to just use round numbers, let's count 5% of it towards your 15. I'd still put in another 10 in money that you control… But we're not giving it 100% credit...It'll still be there. I'm not predicting the end of it, but I think you'll do a lot better with a 10% contribution than you do with this 9% contribution.”

3. Emphasizing Control and Diversification

• Retirement security comes from not relying on a single, externally managed source. Even if pensions are likely to persist, building individual retirement funds gives you more say and typically yields better long-term growth.

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Notable Quotes & Memorable Moments

• Bridget (Caller), [00:38]: “Should that 9% be included as a part of the 15% that should be towards retirement?”
• Dave Ramsey, [00:49]:
  • “There's two problems with your pension. One is you don't have any control over what it's invested in...The second problem is because pensions are heavily regulated, what they invest in is more conservative. And so your average rate of return...is about 7%.”
• Dave Ramsey, [01:05]:
  • “I would count about half of it. So, if we want to just use round numbers, let's count 5% of it towards your 15. I'd still put in another 10 in money that you control…”

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Timestamps for Important Segments

• 00:14: Introduction to Bridget’s question
• 00:21: Description of her pension situation
• 00:49: Dave outlines the two main issues with pensions
• 01:05: Dave’s direct advice: count half your pension contribution and save the rest in personal investments

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Summary Table

| Segment Time | Speaker | Key Point | |--------------|-----------------|-------------------------------------------------------------------| | 00:21-00:38 | Bridget | 9% mandatory pension; should it count toward 15% retirement rule? | | 00:49-01:05 | Dave Ramsey | Lack of control and lower return of pensions; give "half credit" | | 01:05+ | Dave Ramsey | Recommendation to invest an extra 10% personally |

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Key Takeaway

Dave recommends counting only about half (5% in this case) of a mandatory pension contribution toward the recommended 15% retirement investing goal—placing the remaining percentage in investments you personally control to maximize growth and security.

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For more investing advice or to connect with a pro, visit RamseySolutions.com/SmartVestor.

Transcript

[A]

Foreign. This episode is brought to you by SmartVestor. Connect with an investing pro near you at RamseySolutions.com SmartVestor all

[B]

right, Bridget is in Chicago. Hi, Bridget. What's up?

[C]

Hello there. Thank you so much for taking my call.

[B]

Sure. How can we help?

[C]

What I was calling for was that. So I'm. I was a teacher, now I'm an administrator, and I'm fully funding my pension. And my contribution is 9%

[B]

mandatory.

[C]

And so my question. My question. That is a

[B]

mandatory contribution.

[C]

It is,

[B]

yes. Okay. All right.

[C]

And so my question is, should that 9% be included as a part of the 15% that should be towards retirement?

[B]

Excellent question. Okay. There's two problems with your pension. One is you don't have any control over, over what it's invested in. Two, so the outcome of what you end up with at the end is totally up to someone else. Okay. The second problem is because pensions are heavily regulated, what they invest in is more conservative. And so your average rate of return that you're going to see is about 7%. So because of those two things, I would take your 9%. I would count about half of it. So if we want to just use round numbers, let's count 5% of it. Towards your 15, I'd still put in another 10 in money that you control, but that's giving it some credit. But we're not giving it 100% credit, so to speak. It'll still be there. I'm not predicting the end of it, but I think you'll do a lot better with a 10% contribution than you do with this 9% contribution.