Defined benefit (DB) plans provide a set level of pension at the time of retirement; the amount normally depends on your service or performance and your earnings at retirement. The employer guarantees a set amount for the employee to receive upon retirement.
Defined Contribution (DC) plans, is when the employee contributes a portion of their pay and your employer’s contributions are both invested and the funds used to buy a pension at retirement. The level of your pension may depend on the amount that has been invested, the return on your investments and the cost of your pension at retirement.
Talk to someone in the human resources department where you work to find out more information on retirement preparation. Some employer’s offer it to their employees when they first start or after a grace period. It is fairly easy to sign up for and sometimes you can even chose what stocks or mutual funds that you want to invest in.
If you move from one employer to another you can roll your money over into an IRA or another type of fund. It is important that you keep the money when you leave. You can find a local broker to help you invest the money.
There are companies out there like Charles Schwab, TIAACREF, Edward Jones, Vanguard, Merryl Lynch, that give you another option if your employer does not offer a retirement plan or to roll over your funds. You can contribute money to a mutual fund, stocks, and bonds, CDs or Money Market. This will help you set aside money for retirement preparation. No load mutual funds will cost you less money and be sure to check if there is a fee to invest with a company. Do your research before investing; it will pay off in the end.
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