Don’t Rely on Your Pension Alone

Events in recent years involving businesses such as Enron and WorldCom have people concerned about establishing pension accounts with their employers. You can hardly blame them, either. Employees around the country are being told, “Don’t rely on your pension alone” when it comes time to retire.

While the chances of every business in the United States being dishonest and bilking their employees out of their hard-earned pension are slim, Enron and WorldCom are examples that it can happen. If you are concerned about the prospects, the solution is to have more control over the funds that you set aside for retirement, and where they are placed.

As a general rule, 401(k) plans are a safe place to save money. Your employer will deposit pre-taxed money into an account and will usually match a portion of your contribution. You should be able to decide where the money is placed, and in which proportions. If you are concerned that things aren’t right, your employer should have given you a telephone number for you to contact concerning your account.

It is unlikely, however, that even if you saved the maximum allowable contributions you would have enough money saved to cover the entire length of your retirement. It is for this reason that diversification is a good idea, especially when it comes to retirement funding.

There are several options to choose from when saving for retirement:
• Personal retirement accounts
• Roth Individual Retirement Accounts
• Money market funds
• Stocks and bonds
You may or may not have funding from Social Security, so you’ll want to consider some of these other options when planning your retirement nest egg.

One thing you can control, much more than the amount of money you could earn from the stock market, is what you are currently spending. If you choose to live below your means, and saving what you don’t spend, you can put that extra money toward IRAs or other stable savings plans.

There are even retirement plans for those who are self-employed. Keogh plans can be opened at any bank, credit union, or brokerage firm but have certain limitations. Check with a financial planner, financial counselor, or certified public accountant to get the rules for saving contributions for your state. Individuals may also set up individual retirement accounts, either traditional or Roth.

No matter where you place your money, you want it to grow for you. Having more than one source of saving would also be advisable since you never know what the financial markets are going to do. However you decide to save for retirement, don’t rely on your pension alone. You may find that there just isn’t enough there to meet your needs.



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