Page 71 - Book10E

CHAPTER 9
Where Should I Save My Money?
There are many ways to save for retirement. Some of them are listed here. Talk to your FFEF counselor to find out about other possibilities and which ones might work best for you. Don’t put all your eggs in one basket. If you deposit your money in more than one place, you can reduce the risk of losing money.
Defined Benefit Plans and Defined Contribution Plans
A defined benefit plan is a pension plan that is managed by your employer. It guarantees you a specific amount of money when you retire, which is usually paid in monthly checks for as long as you live. These plans are protected by the federal government, which ensures that you will receive the benefits even if your employer goes out of business. Some employers are beginning to change defined benefit plans to cash balance plans. For information, visit www.dol.gov.
The 401(k): The 401(k) is one of the easiest ways to save for retire- ment. It is a long-term savings plan instituted by an employer in which a deposit is deducted automatically from your paycheck and invested by a plan manager. It is important that you educate yourself on the investment options your 401(k) offers you and take an active part in watching how the value of the investments changes. Either your employer or your plan manager will make information available to you about how to control your investment and the funds available for you to invest in.
61