Retirement Fund

Retirement accounts are the excellent way to save your money for your future. It is important for you to know about the how your retirement fund works.

It is important for you to think about the day when you will retire. You may get another job or not but it’s good for you to have a safety for retirement. For most of the people retirement fund can be the only source of income after retirement. You will be forced to work even after your retirement if your retirement fund is not enough for. There are many reasons which can affect your future even if you have a luxurious life now. Inflations, taxes, rising in cost of living etc can cause your future. It is always advised to prepare your retirement plan. Another fact is that contributing towards your retirement account is eligible for tax deduction. Which means you can save some tax money by contributing for your future. Even part time employees are eligible for retirement funds if they work for a minimum of 1000 hours a year.

The first thing you need to do is to understand the retirement plan by your employer. There are many types of plans and your employer may have one or more types of plans. You should verify the types and the requirements. You should determine your financial position after your retirement and also determine your needs after your retirement. Then prepare your retirement plan with the information. If you don’t know to plan or got any problem in planning then provide your information in Ask Moran section. I will help you in preparing your retirement plan.

There are plenty of retirement plans. There are two major types of plans and all the other falls in these two categories, defined benefit plan and defined contribution.

 In the defined benefit plan you are assured by the employer for specific monthly benefit after retirement. It is calculated on some basis. For example it may be 5% of your average salary of for last 3 years of employment.

In the defined contribution plan you and your employer contribute some percent of your salary to your account. Generally those contributions are invested. The best example for defined contribution plan is 401(k).