By Abbie
A Pension Plan when you regularly
(like perhaps monthly) place money into a savings account for when you
retire. It's something that you
definitely want to start as soon as possible so you can get a good sum of money
when you're done. A defined benefit plan
and a defined contribution plan are the two different kinds of pension plans.
The defined benefit plan makes sure
you have a certain amount of money regardless of what you have invested. They generally base this on age, salary, and
how long you've been with the company.
It assures you have a certain amount of money monthly. This plan is costlier for businesses so many
are switching to the defined contribution plan.
Railroads and airlines are two that used this plan and today are
struggling so they had to stop, unable to afford it.
For the defined contribution plan
you just put your own money in. However,
you control the sum going into the defined contribution plan, so although it
might sound harder, it's probably better.
Often the defined benefit plan doesn't leave you enough money to live
comfortably after you have retired. It's
also just less of a risk for companies to leave your retirement fund up to you
to work out, because if they promise you that they'll give you a certain amount
of money monthly, they must provide you with it.
