The Retirement Benefit Most Doctors Overlook - and Why You Shouldn't
How a pension could quietly add millions to your retirement without you even noticing
When I finished fellowship, I had a few job offers on the table. Two groups stood out - both offered similar salaries, but only one came with a pension.
Back then, I didn’t really understand what a pension was, let alone how to evaluate its value.
So today, I want to share what I wish someone had explained to me about pensions. If you’re job hunting, this might help you make a more informed - and smarter - decision about who you choose to work for.
What Is a Pension, Really?
A pension—technically called a Defined Benefit Plan—is a retirement promise your employer makes to you. They guarantee you’ll receive a specific monthly income once you retire. The exact amount is usually based on a formula including your salary and how long you’ve work for the organization.
This is very different from a 401(k), which is a Defined Contribution Plan.
With a 401(k), what you get in retirement depends entirely on:
How much you contribute
How well your investments perform
So if the S&P 500 crashes, your 401(k) balance crashes with it. Ouch.
But with a pension?
Your benefit doesn’t depend on market performance. Your employer is on the hook for paying you the amount they promised - based on that formula — no matter what happens in the markets.
That means even if the S&P 500 drops 90%, you’re still guaranteed to receive your full pension benefit. That’s the core advantage: the employer bears the investment risk, not you.
It’s Protected, Too
Employers who offer pensions are required to pay insurance premiums to the Pension Benefit Guaranty Corporation (PBGC), a federal agency that steps in to cover part of the promised benefit if the employer goes belly up.
The Employee Retirement Income Security Act of 1974 (ERISA) also provides legal protections for pension participants. Even O.J Simpson’s NFL pension was protected from civil judgments.
In short, your pension isn’t just a vague promise—it’s a legally protected benefit.
Why Are Pensions So Rare Now?
Pensions are becoming an endangered species. Only about 10% of Fortune 500 companies still offer one.
Why? Because they’re very expensive
Employers must follow complex IRS, actuarial and ERISA rules, which drive up administrative costs
They’re are on the hook for providing guaranteed lifetime income—even in the worst-case market scenarios
That’s a lot of risks for an employer to take on. So, many have decided not to offer pensions at all.
So What Should You Do With This Information?
If you’re choosing between two employers—and one offers a Defined Benefit Plan—don’t overlook it.
Why?
Because a pension can add serious value to your total compensation. It’s not just a nice perk - it’s a powerful retirement benefit that could be worth millions over your lifetime.
How Much Is a Pension Worth? (Quick Math)
Let’s say your employer offers a pension that pays 50% of your highest 3-year salary average for life after 30 years of service.
If your average salary is $300,000, that’s $150,000 per year in retirement.
If you collect that for 20 years? That’s $3m in total retirement income.
Now spread that over your 30-years career at the company. That’s about $100,000 per year in hidden compensation— on top of your regular salary.
That’s massive.
But Here’s the Catch
You don’t get that $3 million if you leave the job early.
If you leave before you’re fully vested - often five years - you might get nothing.
Even if you stay for 10 years, your pension benefit be based on your salary at Year 10. Then, you’ll wait another 20 years to collect. That delayed payout may be a fraction of what you’d receive if you had stayed for the full 30 years.
Why?
Because pension formulas are usually tied to your final average salary - and your Year 10 salary will likely be much lower than your salary at the end of your career.
In real numbers? You might end up with just 10–20% of the full pension value, depending on salary growth and inflation.
Compare the Jobs Realistically
Employers who offer pensions may even pay a slightly lower salary - but that’s often because they’re funding your pension behind the scenes.
So don’t just compare base pay. Ask:
“How much do you contribute annually to my pension?
Here’s what mine looked like in 2022 (for reference, Plan 1 is the name of my company pension).
That simple question can give you a much clearer picture of your total compensation - not just your paycheck.
Who Should Care Most About Pensions?
A Defined Benefit Plan makes the most sense if:
You plan to stay with the employer long-term (at least 3-5 years, which is typically required to become eligible for a pension), and
You value long-term retirement security more than a short-term salary boost.
If that sounds like you, a pension could be one of the most valuable benefits you’ll ever receive.
Final Thought
When I was job hunting after finishing fellowship, I didn’t understand the value of a pension.
Now I know it’s a rare - and incredibly valuable - employment perk that could be worth millions by the time you retire.
So, If you’re deciding between two jobs, don’t overlook this benefit.
You won’t see it show up in your bank account right away, but it offers something even more important: the security of a cushy retirement.
And trust me - your 65-year-old self will thank you for it.
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