With retirement, you can opt for various pension plans for a hassle free post retirement life. One can also reduce working hours and semi-retire. Many opt to retire while they are eligible for public or private pension benefits. But some may retire due to illness or conditions which do not allow them to work any longer.
There is different retirement age for various countries but normally it is between 55 and 70. In the US, the early retirement age is 62 while normal retirement age is 66. Pension retirement age will give retirees a range of benefits. But it may be difficult for choosing between pension options. So if you choose an option which will guarantee pension benefits for your spouse after your death will mean extra security but lower monthly benefits. But if you choose a pension option which will pay through your lifetime, you can get larger monthly payments. This will need a lump sum for the protection of your spouse if she lives longer than you.
A single pension at retirement is a monthly pension payment. You will receive this if you select a single annuitant pension. While through the joint pension at retirement plan, you will also receive a monthly pension payment by choosing a joint survivorship pension.
There are various types of pensions such as employment-based pensions (retirement plans), disability pensions and social or state pensions. Through the employment-based pension plan, you can have an income when you are no longer in employment. The funding is provided by both employers and employees through a fund during their employment. Therefore pension plans are also a type of ‘deferred compensation’.
In social and state pensions, a fund is created by the government for provision of income after retirement. These require payments during a persons working life to get the benefits later. Social Security is one such benefit. Disability pensions are for members suffering a disability. One can opt for an early retirement plan before the normal retirement age.
The retirement benefits are calculated on four factors namely, the person’s age, group classification, the average of the 3 highest consecutive years’ salaries, and years of creditable service.