If you want to know exactly how much money you'll have when you retire, which retirement plan is most suitable?

If you want to know exactly how much money you'll have when you retire, which retirement plan is most suitable?

• A. 401(k)
• B. Money market
• C. Mutual funds
• D. Pension plan

Answer: (D)

A pension plan is designed to provide a predictable income in retirement based on a formula that takes into account factors such as salary history and years of service. This structure allows individuals to calculate with greater accuracy the amount of money they will receive upon retirement, as it often guarantees a fixed benefit for life or a specific payout over a predetermined period. In contrast, while a 401(k), money market accounts, and mutual funds can provide returns on investment, they are subject to market fluctuations and economic changes, making it more difficult to determine an exact amount for retirement. The outcomes of these plans can vary significantly based on investment choices, market performance, and personal contributions. Thus, the predictability and guaranteed benefits of a pension plan make it the most suitable option for someone who wants to know exactly how much they’ll have upon retirement.

A pension plan is designed to provide a predictable income in retirement based on a formula that takes into account factors such as salary history and years of service. This structure allows individuals to calculate with greater accuracy the amount of money they will receive upon retirement, as it often guarantees a fixed benefit for life or a specific payout over a predetermined period.

In contrast, while a 401(k), money market accounts, and mutual funds can provide returns on investment, they are subject to market fluctuations and economic changes, making it more difficult to determine an exact amount for retirement. The outcomes of these plans can vary significantly based on investment choices, market performance, and personal contributions.

Thus, the predictability and guaranteed benefits of a pension plan make it the most suitable option for someone who wants to know exactly how much they’ll have upon retirement.