Retirement Plans - Overview

Subscription to retirement plans at an early age is a healthy practice. In the United States, more then 50% of the working population opt for one or more pension or retirement plan. These plans help the individual to save money at the time of employment to spend after retirement. Whether you are twenty year old or fifty year old, it always pays to invest today in some plans.

Types of Retirement Plans

A variety of options, ranging from private plans to government sponsored ones are available in the market. You can choose the one which best serves your purpose.

Government-backed Plans

Government-backed plans are the largest retirement program in US. These provide the employers and their families with retirement, disability and other benefits.

Employer-backed Plans

Sometimes, Retirement Plans are offered by the employers. These plans can be categorized in to qualified and non-qualified plans. Qualified employer-backed plans in US include 401(k), stock bonus, corporate profit sharing and money purchase pension plans. Non qualified retirement plans include 457 and similar employer-backed retirement programs.

Private Plans

The private plans are very useful for the uncovered workers. This was introduced in US in the year 1975. It allowed the employees to subscribe up to $2000 into IRAs (Independent Retirement Account).

Annuities

This is a wonderful retirement program, which is in vogue in US. These allow the workers and their families to get the advantage of tax-deferred investment of income. This ensures a steady flow of income to the account holder post retirement. Many private insurance companies have tweaked this plan to incorporate saving as well as death benefit to attract more investors.

Potential

This has been the result of federal deficits. The federal deficits have led to the development of tax-sheltered retirement programs. The Employee Retirement Income Security Act was passed in 1974. Since then the federal government in the United States are favoring programs which cover a large number of employees cutting across different sectors of the economy. New regulations have extended the maximum contributions, age limit and the tax benefits for private programs.

These Retirement Plans help you to be financially stable in the long run. Thus it should be given importance in your Retirement Planning.