How do companies and the government afford to pay people a pension?
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They set the money aside from each paycheck and invest it over time. When that person retires, they get their pension in a lump sum or monthly payouts. With a pension, the risk lies with the company, as they are responsible for the returns generated and funding it properly. With an IRA or 401k, the risk lies with the retiree, as they have to invest it properly to ensure they have enough for retirement.
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