had a job interview the other day where they mentioned that i would get a pension that was vested in 10 years if i was selected for the job
wtf does a pension being vested mean? and whats the different between a pension and something like a 401k that makes people like pensions more?
In: Economics
If you retire before 10yrs of working there, you don’t get your pension (or you get a reduced amount).
Pensions are defined benefit, the benefit (payout) is defined by a formula (e.g., for Florida state employees it’s years • 1.6% • average of highest 8yrs).
401ks are defined contribution, you contribute a defined amount and invest in the market, so it’ll be worth however much you contribute and how much your investments grow and also how much you decide to withdraw (common advice is withdraw 4% of balance and adjust for inflation after that, which has a good chance of lasting 30yrs).
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