Retirement
Plans in the U.S./ Carlos Pueblo
I have
always enjoyed discussing the retirement plans in the U.S. which I
have considered
as a comprehensive, fair, and considerate. I am one of
the
beneficiary of such plans in a defined benefit plan, a HR-10 plan, a
traditional
individual retirement account, and a 401k account, of course,
including a
social security insurance plan. Almost all the retirement plans
are funded
by the contribution of the individual except the defined benefit
plan which
is gradually diminished nowadays.
I started to
withdraw my defined benefit plan at 55 with my last employer
for $202 a
month. This amount helped me to make up my decision to withdraw
my social
security benefit early at age 62 for a discount amount. I figured if I
would live
up to age 85, I can come out ahead of a lump sum distribution, on
the other
hand, I may lose some on the social security; however, I can make up
the loss by
postponing the other withdraw of pension plans. Most of the employers
of the U.S.
don’t provide the defined benefit plan, instead, they provide a 401k
plan to
replace the old defined benefit plan in order to save the cost.
I
contributed 10% of my gross income to the previous employer which also provided
the small
defined benefit plan. The employer also provided additional 4% contribution
to that plan
with a 4 years clause in order to be your money. In addition to that, the
company set
up an additional annuity plan for you to contribute 13% after tax fund.
This
employer is very considerate for the retirement of the employee. Actually, the
employer does
not contribute much for such retirement plan at all; however, this plan
help me very
much in the future of my retirement portfolio. My 10% contribution was
before tax
and subject to income tax deductible. 13% annuity contribution is not subject
to tax
deductible yet the annual gain and appreciation is sheltered till the withdraw.
As a
self-employed proprietorship, I have contributed to a Keogh Plan, a HR-10
pension
plan, later
I transferred to a ro-over individual retirement plan, IRA. This plan I
contributed
25% of my
annual adjustable gross income and subsequently received the tax deductible
with the
same amount. This account has been grown amazingly even helping me to support
both of my
children to finish college education, of course, IRS allows me to withdraw the
necessary
amount periodically until age 59.5. I
stop to withdraw at that age and shall return
to with draw
at age 70.5 according to IRS rule.
The way to
financial independence is working and saving. The working and saving requires
a good
education, a good philosophy of your life and a good retirement plan.
