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A retirement benefit is a monthly or periodic sum paid to a person who has retired from full-time work. Different jobs may entail different types of retirement benefits; some are mandatory while others are voluntarily undertaken. Some of the most common types of retirement benefits include Social Security benefits, pension plans, and military retirement benefits.
Social Security retirement benefits are paid out to most American workers upon retiring. In most jobs, deductions for Social Security are automatically taken from paychecks, meaning that workers are paying into the system throughout their careers. Benefit payments depend on how long a person has worked at qualifying jobs and the age at which he or she retires. Anyone born after 1960 will received a reduced benefit payout if they retire before age 67. A family member with benefits may be able to receive additional retirement benefits for his or her spouse and dependent children, and people who are widowed may be able to receive some of their deceased partner's benefits.
Pension plans are sometimes offered by employers in addition to Social Security retirement benefits. Other organizations, such as labor unions, may also offer pension plans to qualifying members. These plans are often tax-deferred and allow both employees and employers to contribute an annual amount to the fund. Upon retirement, the worker receives regular payments from the pension, usually lasting for the rest of his or her life. The major difference between pension plans and plans such as Social Security or the UK-based National Insurance is that pensions are private funds offered through an employer, while state-based retirement benefits work through government offices.
Military retirement benefits are often handled separately than other state-run retirement programs such as Social Security. Often, people in the military do not remain employed by the service until the full retirement age because of the physical demands of many military positions. To deal with this issue, some military retirement plans allow personnel to start receiving benefits upon retiring from the military, even if they go on to a private career. Like other state-run plans, benefits levels are dependent on years served, among other conditions.
Retirement benefits are often very important to financial survival after retirement. With the demands of life and family, many people are unable to store up nest eggs in tradition savings accounts and must rely fully on the availability of retirement benefits after ceasing a regular work schedule. Since the fate of some state-run retirement programs, such as Social Security, is considered somewhat uncertain, financial experts often recommend trying to set up and at least make minimum contributions to a private retirement fund, pension plan, or annuity plan, as early as possible in a working career.
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