For investors, retirement is generally built on three pillars: personal savings – such as 401(k)s – IRAs, and social security from the government. And for the lucky few, corporate pensions. The steady stream of monthly income from employers has dwindled in recent years as most firms have moved to strictly offering defined contribution plans like 401(k)s.
And it looks like the number of people with pensions is set to dwindle further.
According to a new study, the underperforming nature of several pensions is only going to get worse, which could mean a full on disappearance of the pension from the retirement lexicon. And that’s a problem for those investors already in one.
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Living Past 100
Originally, pensions (or defined benefit retirement plans) were the only retirement plan. With pensions, an employer makes contributions into a pool of funds set aside for a worker’s future benefit. That pool is invested, and then that pool of funds is paid to former employees as they retire. And for a long time, this system worked great.