There are people in the United States of America who are too keen about their pension funds. They save very little while they work since they know that they have their pension plan to support them in the near future. However, according to recent reports, there will be some new changes brought into the pension funds in 2015 and onwards. Managing your pension funds is indeed an art that you need to master; a single mistake can lead to a big disaster in the near future. What if you wish to leave your job before you retire? Have you ever wondered what will happen to your pension plan with your current employer? Well, if you haven’t, here are some ways that you can handle your pension plan if you wish to take voluntary retirement.
- Transfer the money to your new company’s plan: Chances are high that your new employer will accept your old pension plan. In fact, there are some industries that have multi-employer pension plans which means that you can shift one company to another and yet take your pension with you. Here’s what happens if your new employer accepts your pension plan. Your new employer either transfers the money in your account to your new company plan or a transfer with full credit means your new employer counts the number of years you’ve worked under the old plan as this is a vital factor in shaping the amount that you’ll get after you retire.
- Buy an annuity for monthly income: You’ve certainly heard about a life insurance company and a life annuity is a contract that you set up with a life insurance company. In return for your pension savings, you will get regular payments as long as you’re alive. But once you sign the contract, you can’t change your mind, even if you wish to. Buying an annuity is indeed an unlikely choice for majority of the people who leave their job early as you might not have lots of savings. So, it may be a better choice if you’re nearing retirement.
- Transfer the money to a special retirement plan: You can also transfer your pension dollars into a special plan. Some call these plans ‘locked-in’ as you can withdraw your money until you retire. In most cases, you can only get your money earlier if you don’t have enough savings in your savings account, you can prove a dire financial need and if you have a medical emergency. Locked-in Retirement Account (LIRA), Life Income fund (LIF) and Locked-in Retirement Income Fund (LRIF) are some special retirement plans.
Hence, if you’ve decided about retiring before your actual retirement age, take the above mentioned steps to manage your pension funds and avoid any kind of harassment while receiving the benefits. However, it is undoubtedly a better option to retire right at your retirement age as this is the best way to avoid all the loopholes of the service providers.