Retirement is one of the biggest worries of life and retirement plans play a vital role in providing a source of income in a person's retired years. Retirement plans are much like saving for a 25-year vacation.
To pay for an expense of that extent a person needs to start planning early. You can get various Pension Benefits Through the US Department of Veterans Affairs . Age has a critical impact on one's ability to save.
Sources of Funds
The company retirement policies and personal lifetime savings are the three sources from where funds are drawn to pay for expenses after retirement.
Different type of plans
There are a number of plans that benefit employers and employees equally.
- A qualified retirement
- Non-qualified retirement plan.
These plans are typically used to provide a deferred reward to key employees. The plan allows wider flexibility to an employer and thus, they do not receive tax deductions until the employee receives proceeds from the plan.
A defined benefit plan is a conventional company pension plan. The retirement profit is determinable as a dollar amount or as a percentage of income. These plans are funded entirely by the employer and the accountability for payment of the accompanying benefits rests with the employer.
A defined contribution plan is a retirement plan in which the contribution is defined, but the ultimate amount of profit to be paid is not. The actual benefit at the time of retirement depends on the amount contributed over the years and on the investment performance of the account through the years.