The Motley Fool Discussion Boards
Investing/Strategies / Retirement Investing
|Subject: Re: Retirement savings benchmark||Date: 1/21/2013 12:20 AM|
|Author: pauleckler||Number: 71273 of 81362|
I've also heard many people who do have pensions complain that they are small
Most defined benefit pension plans are designed to pay 70 to 80% of gross pay after deducting full retirement Social Security payments usually after 30 years service.
Small pension usually means you retired early or with less than 30 yrs service.
Of course companies find the cost of defined benefit pensions prohibitive--especially when interest rates are low, and when govt regs require big payments to the pension plan to make up for declines in the stock market. This hurts earnings in an unpredictable way.
So more and more companies go to defined contribution plans (ie 401k plans ideally with generous matching provisions) to stabilize their contributions. But this means your 401k plan must perform well, and if not you may not be able to retire.
|Copyright 1996-2016 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us|