Is it really over? Corporate pensions funds are headed to extinction…read on

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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.)

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Robert L Woods

I am a personal finance and investment educator who’s passion is to teach financial literacy to my community to give them financial empowerment so they can control their own destiny.

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About Me

Robert L. Woods is the retired partner of the Institute For Fiduciary Education ( that provided investment seminars for public and private pension funds, endowments and institutional fund managers. He spent 28 years working for the State of California, as a budget and financial analyst which includes 16 years as an Investment Officer for the California State Teachers’ Retirement System (CalSTRS). At CalSTRS, he established it as one of the nation’s first institutional home loan programs with a down payment assistance component. He also spent 13 years on the Board of Trustees for the Sacramento County Employees Retirement System (SCERS). He was a Trustee with the University of California, Davis, Cal Aggie Alumni Association and a member of the Chancellor’s Council on Community & Diversity. He is a Life Member: Phi Beta Sigma Fraternity, Inc., Theta Gamma Sigma Chapter, Sacramento, CA.

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