For virtually all US workers, there is social security. This is roughly equivalent to the national pension system of other countries. You and your employer both contribute a fixed percentage of your paycheck. Upon reaching retirement age, you then get a defined contribution.
Then there are employers based pension plans. The same basic principle applies. Put money in, get money out upon retirement. It is considered a bad deal for employers, because they have a ton of financial liability on their books. In terms of monetary compensation, it is good for employees. However it takes a ton of time to be eligible, which means they can’t increase their salary by job hopping and are vulnerable to layoffs. Most employer pensions are gone outside government pensions.
Finally, there are defined contribution accounts. You contribute a certain percentage of your paycheck into a tax advantaged brokerage account. You then invest these contributions, typically in a target date retirement fund. it is also common for an employer to match contributions.
So the US has three retirement systems.
For virtually all US workers, there is social security. This is roughly equivalent to the national pension system of other countries. You and your employer both contribute a fixed percentage of your paycheck. Upon reaching retirement age, you then get a defined contribution.
Then there are employers based pension plans. The same basic principle applies. Put money in, get money out upon retirement. It is considered a bad deal for employers, because they have a ton of financial liability on their books. In terms of monetary compensation, it is good for employees. However it takes a ton of time to be eligible, which means they can’t increase their salary by job hopping and are vulnerable to layoffs. Most employer pensions are gone outside government pensions.
Finally, there are defined contribution accounts. You contribute a certain percentage of your paycheck into a tax advantaged brokerage account. You then invest these contributions, typically in a target date retirement fund. it is also common for an employer to match contributions.