While you are still young and while you still have a great job, do not forget to plan for your retirement buy investing in financial vehicles that will give you a more secure future. While it is great that for many years, the US government had ways to protect senior citizens upon their retirement, it is also better if you learn to invest for your future needs. Lately, the SAFE Act of 2013, or the 2013 Secure Annuities Act for Employee Retirement has been getting some publicity because of its reforms to the employees’ retirement plans. With the inclusion of annuities, some people wonder if they can get cash for annuity in case they have immediate needs. Here is some of the pension plans covered under the SAFE Act.
Reforming the Public Pension Plan
Local and state government employees will benefit from the annuity accumulation retirement plans. These are in addition to the Federal retirement systems that are already in place. This is not to say that the existing pension plans for government employees are not going to be changed. These are going to be studied and improved, as the employees are given more benefits through the inclusion of annuities in their retirement plans. What this means is that, at least annually, will purchase a deferred fixed income annuity for a qualified employee. This will provide more financial security during the employees’ retirement.
401K for Private Employees
On the other hand, employees of private establishments and corporations will still have their 401k. While there are people who say that the 401k will not be enough for a person’s retirement, this is a good investment vehicle for someone who would like to start saving for his retirement. The 401k allows the person to be exempt from taxes on the saved money and its earnings until he withdraws the money. This is a great opportunity to save money for retirement especially if a person’s employer does not offer its own retirement plan. Aside from the traditional 401k, a starter 401k may also be offered, which allows an employee to save up to $8000 a year. This is found perfect for employees of small businesses since it does not involve the same burden as that of a traditional 401k.
Annuity Accumulation Retirement Plans
This is proposed in the hopes of solving the pension problem in the United States. The employer will purchase a deferred fixed income annuity for the employee as part of the employee’s retirement plan. This will assist in delivering secure pension benefits to retired employees in the US. This is expected to solve the underfunding in the current pension plan system, and promise to give the retirees fixed income for a lifetime. Pension and financial experts have some concerns about this act, and some of them may recommend that a person sell annuity in exchange for immediate cash. There are advantages and disadvantages to the retirement plan changes stated in this Act, and it is best that a person weighs all his options before deciding to sell his annuity.