If you’re planning to start working again, it’s time to think about your retirement. There are many different ways to save for retirement, such as investing in the stock market or real estate, but one of the most popular methods is through a pension plan with your employer or through an IRA or 401(k) account with a bank or other financial institution. In this guide, we will explore the top five steps you can take to find the best pension plan for your future needs.
1) Understand your Options
There are different types of pension plans: defined benefit (DB) and defined contribution (DC). The differences between these two types of plans can significantly affect your retirement. If you’re in your 20s or 30s, DC is probably better for you because it gives you more control over how much—and how often—you contribute. But if you have a steady income and want more financial security, DB may be worth considering. If you don’t know where to start or feel overwhelmed by all your options, getting help from a financial planner is usually a good move.
2) Ask Friends and Family
Friends and family are an obvious starting point if you’re seeking recommendations on what your best pension plan might be. But of course, ask around with caution—your friends and family may have their own biases or relationships with particular financial advisors, which could cloud their judgement. Instead, tell your friends and family you’re looking for a trustworthy advisor that other people have worked with successfully. You can also look up top-rated financial advisors in your area to get some options from reputable sources. Remember: just because someone is well-known doesn’t mean they offer a good product—but it does give you an idea of where to start looking!
3) Look at Reviews on Social Media
One of your smartest strategies for finding a great pension plan will be looking at reviews on social media. When you find a plan that’s right for you, share your own positive review—whether it’s on Facebook, Google+ or Yelp—and give other people advice on where they should invest their money, too. Not only is sharing your experience an ethical and courteous thing to do; it also helps build trust in your area’s financial community. . . . Trust makes customers happy, which means they’re more likely to return when they’re ready to re-invest. . . . Take customer service seriously: Sometimes things just don’t work out between customer and company. Part of keeping customers happy is doing everything possible to make sure that when something does go wrong, there are no long hold times or bureaucratic nonsense involved in getting it taken care of. Customers who have experienced any type of bureacratic headache are much less likely to trust your investment services than those who have gotten prompt responses and help when needed. Getting things done quickly gives investors confidence in both your investment philosophy as well as ensures customer satisfaction with every interaction from initial sale through any future contact points with company personnel.
4) Check Small Businesses in Your Area
One of the best ways to find out what kinds of pension plans small businesses in your area offer is by reaching out and asking. If you work for a larger company, odds are they already have a handle on what types of pension plans are offered by small businesses, but even if you don’t—it can’t hurt to ask! Small business owners may also be willing to share other tips about how you can compare benefits packages. The important thing is that you reach out in a professional manner, whether that means emailing or calling them directly. This could end up being an incredibly valuable connection that will set your retirement planning on track early on in your career.
5) Check with Tax Advisors
Tax advisors can be a great source of information on how to maximize your retirement plan. They’ll know exactly what rules you’re required to follow and they can help you make sure your plan is in order. With their expertise, you’ll be able to avoid any major mistakes—and you might even be able to boost your retirement funds considerably. To see what kind of advice a tax advisor could offer:
Check out these 4 questions every new retiree should ask a tax advisor.
What Should I Do Now?
If you want to find a good pension plan, it helps to think about what you need from it. There are five main things that come up: contribution limits , match caps , vesting , penalties for withdrawal and taxes.
Most people don’t realize it but each state has its own set of rules that govern pensions—which means there isn’t just one best pension system out there; there are several good ones depending on where you live (not all states even allow 401(k) plans). To take advantage of all those different options, start by finding out whether or not your state offers state-sponsored IRAs—many do!
How Much Can You Contribute?
One of the biggest considerations with any pension plan is your total annual contribution limit. The last thing you want to do is go overboard here because anything over and above will be taxed heavily at penalty rates.
How can you figure out how much you're allowed to contribute?
Simple: look online for guidelines set by both your company and local government. Know Your Match Cap : Another big consideration when looking at pension plans are match caps—how much money will your employer kick in? For example, if your cap is 100 percent, then you’ll get an extra 100 percent of whatever amount you put into your account per year (and let’s say you invest $20K annually; then $40K would grow without any withdrawals between years). Anything higher than that would still earn interest however it wouldn’t earn as much as if there was no cap.