You Still Need a Retirement fund

Retirement fund


Retirement Fund a Must 



Financial security is a common concern for many individuals and this is especially important for individuals who have reached retirement age.  This should not be taken lightly because medical expenses tend to shoot up as one ages.  A retirement fund lets you sit back and enjoy life after working hard for most decades of your early life.  Not everyone can be as lucky so starting early with saving for a nest egg should be something you need to track, the same way you would track the money you deposit in the bank.


Kinds of Retirement Plans


Your retirement benefit is tied to the type of retirement your employer has.  Generally, there are two kinds of retirement plans – defined contribution and defined benefit.  Employers may offer different kinds of plans and participation requirements will also differ for each.  Defined contribution has a set amount of money you and the employer needs to contribute regularly.  As the main beneficiary, you have control on the amount you wish to deduct from your income and how your contributions are invested.  Your retirement plan will depend on the amount contributed and how well your investments perform over time.  Some examples of this retirement plan is 401(k) fund, employee stock ownership plan, profit sharing plan and IRA plan.

Defined benefit plan is usually funded by the employer where retirees can expect to receive an amount each month.  Depending on the plan, a beneficiary may receive an exact amount or this may be calculated based on age, salary and tenure with the company.  An example may be a pension equal to 1% of the employee’s salary multiplied to the years you serve the company.


Be Informed


It is good to reach out to your company human resources department so you can take advantage of this benefit at the soonest opportunity.  Review your employee handbook, if you have access to one, so you can see if there is anything else you need to do on your end to increase your benefits.  Look at eligibility requirement because part time employees will usually require a minimum number of hours of work annually before one can join and be covered by a retirement plan.  For employee stock options, there are enrolment dates you need to remember and if you miss them, you need to wait for the next cycle.  Although benefits can be generous, you will also want to check if these might be reduced and under what circumstances.  That should get you started to optimize your retirement benefits.