A pension is money that someone receives regularly after they retire from working, usually paid monthly for the rest of their life. Think of it as a paycheck that continues even after you stop going to work every day.

Here's how it typically works: while a person is working, either they or their employer (or both) set aside money into a pension fund. After decades of work, when they reach retirement age (often around 65), they begin receiving pension payments. A teacher who works for 30 years might receive a pension of $3,000 per month after retiring, allowing them to pay for housing, food, and other needs without having to keep working.

Pensions were once common in the United States, especially for government employees, teachers, and workers at large companies. Many people today rely on different retirement savings methods, but pensions still support millions of retired workers. The word can also refer to the fund itself: “The company's pension fund is running out of money.”

In some countries, a pension can also mean a small, inexpensive hotel or boarding house, but this meaning is less common in American English.