Corporate Retirement Plans—What You Need to Know

1. Corporate Retirement Plans—What You Need to Know If you’re thinking about your financial plan for retirement or have already determined that you need to have a certain amount for living expenses at retirement, it may be time to learn more about a corporate retirement plan. A corporate retirement plan is an agreement between an employer and employees or the employees’ union. Under the agreement, funding is provided that the employees can access at retirement. The money pool can be increased in a variety of ways, and the money is issued periodically to retired employees, similar to a paycheck. In most cases, both the company and the employees make financial contributions to the retirement plan. Previously, employers were solely responsible for adding money to the plan based on an employee’s quality of work, position with the company and length of time with the company.

2. Types of Corporate Retirement Plans There are two main types of corporate retirement plans: defined benefit and defined contribution. With a defined benefit plan, the benefits for the employee are determined by a formula that is usually based on the employee’s salary history and length of employment. For this plan, the employer must come up with the funds. With a defined contribution plan, there is no guarantee on the amount of benefits an employee will receive after he/she has retired. It is also the responsibility of the employee to add money to the plan, but the employer may also add funds and the success of the retirement fund is based on how lucrative the investment is. There are also a number of corporate retirement plans that promise to provide living expenses for retired employees until death. These funds can cause financial strain on companies, so some organizations are adjusting their retirement plans. These days, it’s more common to find defined contribution plans, but there are still a few larger corporations that offer defined benefit options. Even if you don’t get as much financial support from a small or medium business when it comes to retirement plans, you may still receive other financial tools to successfully prepare you for retirement. Which Is Best? If you’re thinking about changing careers or are taking your first professional position after graduating from college, the first thought on your mind is probably not the retirement savings plan. If your company’s plan doesn’t offer the benefits that you need, you may think that the solution is to start saving on your own. However, this may not always be feasible, so it may be best to hire a financial planner. A financial planner can help you put aside the right amount of money each paycheck to ensure that your standard of living won’t change too drastically at retirement. Financial planners can also provide you with tips for downsizing or refinancing if this would be best for your long-term financial goals. You’ll also learn how to organize the funds that are not in savings, so you won’t overspend on living expenses and have to access your savings to make ends meet. Article Siurce: http://www.moonll.com/2017/05/corporate-retirement-planswhat-you-need.html http://www.richardbrothersfinancial.com/corporate-retirement/retirement-plan-managemen