While there are dozens of ways to squirrel away money for retirement, there are only two types of pension plans in the United States: defined contributor pensions and defined benefit pensions.
For clarity, a traditional pension plan is considered a defined benefit plan, while the more common 401k is considered to be a defined contributor plan.
Let's break down the types of defined benefit pensions.
Single Life Pension
Essentially, a single life pension pays out a pension benefit each month for the remainder of the pension holder's life. If the pension holder dies, the payments stop, even if there is money left on the pension.
So, why would you want to get a single life pension?
Well, for one thing, they have the highest monthly payments, since there's only one beneficiary and the payments only need to be made for the remainder of that individual's lifetime.
The downside is that your spouse, children, or other family members will not receive a survivor benefit when you die.
Joint and Last Survivorship Pension
This is where joint and survivorship pensions come in.
Like a single life pension, joint or survivorship pensions make one payment each month. However, unlike single life pensions, there are two beneficiaries, usually the pension holder and their spouse.
As a consequence, because this type of pension plan has to pay longer, the monthly payout is typically lower than a single life pension. You lose a bit of income, but you gain the peace of mind knowing that your spouse will be financially secure after your death.