Sunday, January 15, 2006

pensions, public and private plans

Today over 7.1 million federal, state, and local government employees are receiving government pension benefits, and another 13.9 million currently employed by government participate in public employee pension plans. Estimates place 75 percent of non-government private company employees as working for companies that offer pension plans, but only 62 percent of men in their fifties and sixties take advantage of such plans, and only 43 percent of both males and females in younger age groups make any use of these opportunities. As recently as 1979,50 million working persons did not take part in private pension plan coverages. Failure to participate in private company pension plans can be extremely short-sighted. The vast majority of people who do not participate in such plans are forced to rely on Social Security as their principal, or even exclusive, source of income. As the article on PERSONAL FINANCIAL PLANNING FOR RETIREMENT in the present volume makes clear, SOCIAL SECURITY was never intended, and is not now intended, to supply a total retirement income-rather, it serves as a secure, government-backed foundation upon which individuals may build private savings, annuities, and company pensions to achieve a financially comfortable retirement. Short-sightedness in individual pension planning can come about in other ways than over-reliance on Social Security. People who are self-employed or work for small companies often may not have pension plan coverage. Because many plans require continuous participation for a considerable period of years (10 years is not uncommon), individuals who change jobs frequently, are laid off, or take leaves of absence may not be covered.
In addition, some company pension plans provide a choice between Social Security or the company plan; or, the company plan is combined with Social Security so that the amount of the monthly Social Security check is subtracted from the company pension check. While many people enter retirement expecting a company pension check, until now only about one third of all workers have received them. Good judgment about planning for retirement recommends participating in pension and savings plans for old age.
See also PERSONAL FINANCIAL PLANNING FOR RETIREMENT.
Averyt, A. C. Successful Aging. New York: Ballantine Books, 1987.
U.S. Bureau of the Census, Statistical Abstract of the United States: 1989, J09th ed. Washington, D.C.: U.S. Government Printing Office.

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