Question

Which are the two major types of retirement plans? ​

Answer 1

Answer:

The Employee Retirement Income Security Act (ERISA) covers two types of retirement plans: defined benefit plans and defined contribution plans. A defined benefit plan promises a specified monthly benefit at retirement.

Answer 2

The two major types of retirement plans are 'Deferred Annuity' and 'Immediate Annuity'.

Explanation:

• 'Retirement planning is a process of deciding the retirement income goals and actions. it includes looking at the future income source, saving for the future, investing in pension plans, etc.'

• This process is lifelong and can be started at any particular time of life.

The major types of retirement plans in India are as follows:

1. Deferred Annuity-This type of pension plan requires the policyholder to pay a single premium. The assured pension will be given to the policyholder after the tenure of the plan is over. The drawback of this kind of plan is that you need a big amount of money to start with.
2. Immediate Annuity-The immediate annuity type of plan requires a lump sum of amount as a premium and the pension is provided immediately after the premium is paid. This kind of plan also requires a lot of money together as an investment but gives you the benefit of a pension immediately.