Retirement and Deferred Compensation Plans

Retirement and deferred compensation plans rank among the most important benefits to most employees—on par with medical benefits. They become more important in the case of key executives and business owners, and even in the rank-and-file, as they begin to approach retirement.

Pension and profit sharing plans are probably the most popular retirement plans, and are often encountered as part of a union's collective bargaining package. 401(k) plans and newer variations and combination plans, have also been gaining popularity of late.

Planning for Retirement

A financially secure retirement is a goal of all Americans. Americans are living longer; many of us will spend one-fourth to one-fifth of our lives in retirement. It is therefore more essential than ever to begin preparations at an early age. Financial planners advise that an individual will require about 75 percent of his or her pre-retirement income, to maintain the same standard of living enjoyed during one's working years.

Social Security, employer-sponsored retirement programs, personal savings, and investments are the main sources of post-retirement income.