| It does not occur to us when we are young and | | | | Labour Unions, government and sometimes also |
| carefree professionals that life will not be as fast | | | | lotteries. Social Security is one of the retirement |
| someday, because you will not be so. While today | | | | planning funds maintained by the State for maintaining |
| we are capable of working sixteen out of twenty | | | | its aging citizens. In it also, one will have to keep |
| four hours, someday we might find ourselves | | | | contributing some amount towards your retirement |
| struggling to cope with even ten. It is inevitable that | | | | income. Depending on the record of your contribution |
| you will age, and it is inexorable that you will want or | | | | history, your pension retirement shall be decided. |
| be forced to retire. So what have you been doing to | | | | If we overlook the ownership of the pension fund, |
| plan for this event? Only waiting to be at the mercy | | | | then we can divide retirement planning methods into |
| of the saving accounts of 401 k planning? | | | | broadly two main categories; defined benefit and |
| But the first question is do you know enough about | | | | defined contribution. |
| pension retirement planning at all. Pension, | | | | As the name suggests, both have one component. |
| superannuation, and retirement plans, all are | | | | Either the benefit or the contribution is more clearly |
| synonymous and interchangeable words. While the | | | | chalked out, while the rest may or may not be as |
| word mostly used in US is retirement plans, UK and | | | | certain and quantifiable. So in defined benefit, you |
| Ireland calls theirs as pension schemes, and Australia | | | | know the exact sum of your retirement income that |
| and New Zealand address it as superannuation plans. | | | | you would get. While in defined contribution, the |
| All of these make provisions to give to people a | | | | pension retirement money which comes to you |
| controlled regular income even after they stop | | | | eventually varies. Its basis is the choices of |
| working. Mostly the pension plan is taken care of by | | | | investment into stocks or mutual funds etc that you |
| the company which employs you. They maintain a | | | | made while you were contributing. |
| savings account of 401k planning, which also defers | | | | To give you best of both the worlds, you have a |
| taxes. Such a pension is known as employer or | | | | special retirement plan called Cash balance. Due to |
| occupational pension and the retirement income is of | | | | their dual features, they are also called as hybrid |
| deferred compensation type. It may or may not | | | | plans. |
| have a component of life insurance or severance pay. | | | | It is important that while retirement planning, for |
| In severance pay though, all the amount of saving is | | | | women or men, one must understand how the |
| paid at one go, in a lump sum, unlike retirement | | | | scheme of things work and what have been their |
| income. Thus, one can say that your retirement | | | | shortcomings over the years, which then you can |
| planning is actually like a long term care insurance. | | | | watch out for. |
| Pension retirement plans are also provided for by | | | | So plan well and have a relaxed retirement. |