These days, very few people get guaranteed pensions and they are almost always 401ks instead.
If you are running a business, isn’t it cheaper to provide pensions? You can invest the money in the same sort of funds that a 401k is invested in, but money not paid out (say, both retiree and spouse die) can be pocketed where 401k goes to whoever is a beneficiary like kids, extended family, charities, pets, etc).
In: Economics
I am not a financial expert but my understanding is that a 401K can run out of money if you outlive your nest egg. The business owner stops paying in as soon as you retire. Owners also limit their contribution if an employee doesn’t pay in their full amount. If the market falls, owners don’t lose anything or risk anything.
A pension on the other hand, is guaranteed income for life. Often, partial payment is included for a surviving spouse. If the market falls payments are still made. Risk is on the owner here.
There is a reason that pensions are down below 10% of most businesses now. It’s the one thing that unions are having trouble fighting for. People go for the raise and give up the ability to retire at a decent age.
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