Is it really over: Corporate pensions head for extinction as nature of retirement plans changes
Reported today in USA Today
The practice of companies sending monthly retirement checks to their former workers is headed for extinction, and remaining pension funds are in tough financial shape.
Nearly two-thirds of pension funds are dropping or considering to drop guaranteed benefits to new workers within the next five years.
Despite gains in the stock market this year (25%), U.S. pension plans are near their worst financial state in years.
Most U.S. companies no longer offer defined-benefit pensions, which typically provided guaranteed monthly payments to workers when they retired.
What does this mean to you? It means you need a retirement saving plan. You do it through a number of ways. Let’s start with an Individual Retirement Account (IRA). A 401(k) and a 457 are common place.
The 401k plan is the most common type of plan which uses tax deferred contributions to help employees save for a retirement. … The main difference between a 401k and a 457 deferred plan. The Employee Retirement Income Security Act of 1974 (ERISA) rules do not apply to 457 accounts, which means there is no tax assessment penalty should you do an early withdrawal.
A Roth IRA is also another option.
Another plan a 403(b), also known as a tax-sheltered annuity plan, is a retirement plan for certain employees of public schools, employees of certain Code Section 501(c)(3) tax-exempt organizations and certain ministers. A 403(b) plan allows employees to contribute some of their salary to the plan.
Which ever one you want to get into go see your Plan Administrator, your financial advisor or your banks investment professional to see what is best for you.
Irregardless what you chose, you have to pick one. Why? Social Security will leave you in poverty. You’ve got to look out for yourself.
Your thoughts?
Until tomorrow, my two cents.
What’s yours?
Robert L. Woods (a.k.a. R. LaMont W.)
