Retirement Services Information
Choosing the right retirement plan for your business is not easy. Two River Benefits can help you identify the best plan type providing a solution which will help retain current and attract new employees benefiting your company. Contact us to find out more about the tax savings and benefits!
Defined Contribution Plans
Planning for the future is more important than ever, the retirement safety net once provided by society is disappearing with the underfunding of Social Security, and with the disappearance of defined benefit pensions. Employees have been left to fend for themselves. Today, more than ever, a 401k is an important vehicle for retirement savings. Today’s worker retiring at age 65 needs to plan for 30 years of retirement instead of the 20 years of previous generations.
A defined contribution plan does not promise a specific amount of benefits at retirement. In these plans, the employee or the employer (or both) contribute to the employee's individual account under the plan, sometimes at a set rate, such as 5 percent of earnings annually. These contributions generally are invested on the employee's behalf. The employee will ultimately receive the balance in their account, which is based on contributions plus or minus investment gains or losses. The value of the account will fluctuate due to the changes in the value of the investments.
Defined Benefit Plans
There are five different types of annuities, but all boil down to essentially the same thing: An insurance contract that offers guaranteed income, often for life, and sometimes with a shot at capital appreciation. Annuities are meant to supplement income from a traditional stock and bond portfolio, and can be included in a 401k plan. It is not a good idea to invest more than half of your portfolio in an annuity/annuities because an annuity is fundamentally illiquid.
Annuities make the most sense for pre-retirees and retirees who want to minimize worry about bear markets in retirement. Retirees know they will have a specific stream of income no matter how markets perform. Annuities, in short, represent certainty in an uncertain world.