Build Your Own Pension

If you've done any reading at all about retirement planning, you probably know this: Traditional pensions are going the way of the saber-toothed tiger and the dodo bird. These wonderful devices, which promised you certain defined payouts, are being replaced by the likes of 401(k)s, which promise only how much goes into them. How much you get out of these "defined contribution" plans depends on the investments you choose and how well they perform. In other words, it's very uncertain.

What should you do about this? Well, don't just leave everything to chance, crossing your fingers that things will work out. They're not working out for many current retirees. While many choose to go back to work simply because they're bored, others are going back to work because they have to -- which isn't the best reason to find yourself back at the grind. For instance, out of Wal-Mart 's (NYSE: WMT) 1.3 million employees, 18% are over 55. It has employed thousands of people over the age of 80, too. The AARP regularly lists good employers for those over 50, including Whirlpool (NYSE: WHR), Pinnacle West Capital (NYSE: PNW), and Adecco .

I urge you to take a free, no-obligation test drive of the Motley Fool Rule Your Retirement newsletter. It offers gobs of clear, practical advice on retirement planning, along with recommendations of stocks and funds. Here's one topic you'll read about frequently in the newsletter: annuities. Annuities appeal to me because they offer the chance to essentially build your own pension. I'll offer more on that soon.

The ABCs of annuities
There's a lot to know about annuities, and I can't come close to covering all the bases in this article. But here are a few introductory points:

You can learn much more in these articles:
Annuities: What's to Like?A Foolish Trick: EIAsVariable Annuities: The Lowdown

For example ...
Let me give you a better idea of what you might expect from an annuity. Here are some examples I found at one online quote provider (remember that by shopping around, you can probably get significantly different results):

Now that you have an idea of what to expect, consider learning more about annuities, to see whether one might make sense at some point in your life.

And remember, we'd love to help you figure out how to plan and save effectively for your future, via our Rule Your Retirement newsletter. A free trial will give you full access to all past issues, allowing you to gather valuable tips and read about how some folks have retired early and well. It regularly offers recommendations of promising stocks and mutual funds, too.