Pensioners Cross Their Fingers with Hope as Markets Rock

 

 




Americans who have been saving for retirement are praying for a turnaround in future times as current challenges impact their savings.

Among working-age individuals (ages 15 to 64), the most common type of retirement accounts in 2020 were 401 (k)-style accounts (34.6%). About 18% of working-age individuals had an IRA or Keogh account, and 13.5% had a defined-benefit or cash balance plan.

Pension managers are hoping for positive changes as the current turmoil is neutralized with time.

Yahoo Finance comments, “Markets do recover over time and if you continue to contribute you get the opportunity to buy more units while markets are low which can then benefit you when markets rise. Making sure that you have a well-diversified portfolio spread across asset classes and geographies is vital.”

US Retirement accounts, which are categorized into:

  • 401(k), 403(b), 503(b), and Thrift Savings Plans: employer-sponsored defined-contribution plans that deliver tax benefits. Employees choose how much to contribute, subject to annual contribution limits, and some employers match employee contributions. 
  • Individual Retirement Accounts (IRA) and Keogh accounts: defined-contribution plans that also provide tax benefits for retirement savings. Individuals choose how much to contribute, subject to annual contribution limits. The plans have account values that can provide income during retirement.
  • Defined-benefit and cash balance plans: plans that typically deliver regular payments to support retirees. Payments from a defined-benefit plan often depend on an employee’s earnings and length of service, while cash balance plans define the benefit in terms of a stated account balance.  

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