, 403s, IRAs, SEPs, pensions, and so many more plans available to working Americans saving up to retire one day. — are totally different, and whether you utilize one or the other, or both, during the course of your career largely depends on where you work.plans, while 401s are defined-plans. If you're not well-versed in tax law or financial jargon, that probably doesn't mean much to you, but it's a big distinction.
A pension provides a specific benefit to an employee when they retire, usually determined by a formula that considers the employee's age, years of service, and compensation. At retirement, a 401 is worth only employee contributions and investment gains, with the occasional employer contribution. Employers assume the risk with a pension plan and must guarantee retirement income to an employee. Because they're expensive to maintain, many private employers have phased out pension plans and replaced them with 401s or other profit-sharing plans.
Someone with a 401 has full control over their investment choices and can fit them into their overall investment strategy, and has the power to draw on their savings before retirement if needed. If you don't manage risk well and your interest in financial markets is low, you might think a pension plan sounds like a better deal. The opposite could be true, too.
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