Dear Liz: I work for a local government and my job offers a pension as well as a 457 deferred compensation plan. If I delay starting my pension, will it have the same 8% growth that Social Security offers? Is my 457(b) plan much better than 401(k)?
Answer: Government pensions and Social Security both offer guaranteed income for life, but use different formulas for determining benefits.
Social Security is generally based on the worker’s 35 highest-earning years. Recipients can earn an 8% annual boost in their retirement benefit for each year they delay starting after their full retirement age, until benefits max out at age 70.
Pensions, meanwhile, are typically based on a combination of age, final salary and years of service. Delaying retirement typically does increase your benefit, but how much depends on the details of your plan. Many plans offer tools for estimating your future benefits, or you can contact your human resources department.
Your 457(b) plan has much in common with a 401(k). Both allow workers to contribute pretax money through payroll deductions up to certain limits ($24,500 in 2026, with an additional $8,000 catch-up contribution for those 50 and older, plus an additional $11,250 for those 60 to 63). The amount you ultimately get in retirement isn’t guaranteed but depends on how much you contribute and how the investments you choose perform over time.
A major difference between the two types of plans: 401(k)s typically offer some kind of matching funds, while 457(b)s often do not. On the other hand, early withdrawals from a 401(k) are usually penalized, while you can generally withdraw money from a 457(b) penalty-free after you leave your job.
Dear Liz: I read your column about qualified charitable distributions, where you can send a required minimum distribution to a charity so the RMD won’t be taxed. I have a donor-advised fund and would like to know if I can put my RMD into that, rather than send it directly to a charity. The funds in my donor-advised fund eventually get distributed to charities.
Answer: Sorry, but qualified charitable distributions can’t be made to a donor-advised fund. The RMD must go directly from your IRA to a qualifying charity to avoid taxation.
To recap, QCDs are available to people 70½ who can contribute IRA funds to charity (up to $111,000 in 2026). The distribution is not included in the donor’s taxable income and can count toward any required minimum distributions.
Dear Liz: Here is some further consideration in the discussion about older people not filing tax returns. I am old, live in Maine, have a low income but high housing costs. In 2024 I had zero dollars withheld to the state, yet received a $2,210 credit from the state. There was $2,000 for a “Property Tax Fairness Credit” that is available to those who pay high rent or high property tax. The other $210 was a “Sales Tax Fairness Credit.” You don’t have to be old to qualify for these credits. The relief that these credits provide is well worth the effort of filing tax returns.
Answer: People 65 and older typically don’t have to file federal tax returns if their incomes are under certain limits ($17,750 for singles and $34,700 for married filing jointly in 2025). But there are a number of reasons to file tax returns even when they’re not strictly required, including claiming tax credits, getting back income tax withheld from paychecks or retirement accounts, and getting access to any future government stimulus payments that might be offered.
Liz Weston, certified financial planner, is a personal finance columnist. Questions may be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com.
The post Should I delay my pension payments as long as possible? appeared first on Los Angeles Times.
