Скачать или смотреть Retirement Planning FACTORS | Employer Contributions and Risk Tolerance

Are you wondering how much your employer's contributions and risk tolerance should factor into your retirement planning?

Employer contributions are a crucial aspect of retirement planning, especially if you have a 401(k) plan. Many employers offer a matching contribution, meaning they'll match a certain percentage of the money you put into your account. It's essential to take advantage of this benefit and contribute as much as possible to your 401(k) to maximize your employer's contribution.

Another critical factor to consider when planning for retirement is your risk tolerance. Your risk tolerance is how much risk you're willing to take on in your investments. Your age and retirement goals can play a significant role in determining your risk tolerance. If you're younger and have more time until retirement, you may be more comfortable taking on higher-risk investments. However, if you're nearing retirement age, you may want to opt for lower-risk investments to protect your savings.

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Here are 7 key differences between a retirement plan and a pension plan:

✴️ Sponsorship: A retirement plan is sponsored by an individual or an employer, while a pension plan is typically offered and funded by an employer.

✴️ Benefit structure: Retirement plans are typically defined contribution plans, meaning the employee contributes a certain amount of money, and the ultimate benefit is based on the investment returns. Pension plans are typically defined benefit plans, meaning the employee receives a guaranteed amount of retirement income based on years of service and earnings.

✴️ Investment risk: With a retirement plan, the employee bears the investment risk. With a pension plan, the employer assumes the investment risk.

✴️ Funding: Retirement plans are primarily funded by the employee, while pension plans are primarily funded by the employer.

✴️ Portability: Retirement plans are typically portable, meaning employees can take the account with them if they change jobs. Pension plans are less portable and may require the employee to stay with the employer for a certain period before becoming fully vested.

✴️ Tax treatment: Retirement plans and pension plans both offer tax advantages, but the specifics can differ depending on the plan type and the individual's circumstances.

✴️ Availability: Retirement plans are more widely available than pension plans, which are becoming less common in specific industries and among smaller employers.

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