April 13, 2007, Newsletter Issue #42: Defined Benefit Plans

Tip of the Week

There are two types of Pension Plans: Defined Benefit Plans and Defined Contribution Plans. Your employer sponsors a Defined Benefit plan and you are guaranteed that you will receive the exact amount stated in your paperwork. There is no investment risk involved, and you don't have to worry about saving money for the plan. It is a great choice for employees who are sure that they will not have any career changes before retirement.
There are many benefits to a Defined Benefit Plan. However, it is still wise not to depend upon one plan for all of your retirement needs. Some believe that the future of the Defined Benefit Plan is headed for trouble, so remember it is always best to diversify your portfolio.

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