Your employer might set up a pension plan so you can get money for retirement later. There are different kinds of pensions, but retirement is the most common kind.
You usually have to work five, 10 or more years to be part of a pension plan. If you do have benefits, you can usually keep the money in that account until you retire. Some places will also let you remove the money, but you’ll have to pay a penalty tax.
Benefits of Pension Plans
- Pensions don’t require any effort from you once you join, as professional investors are making decisions about this money for you.
- If you work for a big company, you have a better chance of getting a good pension plan.
Problems with Pension Plans
- If you have a pension plan as a public employee, you may not be able to get Social Security. Many public workers cannot have both. Talk to someone at work about what pension plans might be available to you.
- Fewer and fewer companies offer pension plans for their employees now, so it’s harder to find a company to work for that has them.