A type of defined contribution plan in which you receive a set dollar amount upon retirement, typically based on your last few years of earnings.
Retirement Glossary
P
Pension plan
Portfolio/Asset allocation
By dividing your assets into categories of investment (ie. stocks, bonds, cash, etc.) you can reduce the risks that are traditionally associated with investing.
- Stocks/Equities: A type of investment, which allows you to buy shares in a company, allowing you to profit from their successes, but also puts you at risk of losing money if the company fails.
- Bonds: A fixed income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental).Many corporate and government bonds are publicly traded; others are traded only over-the-counter (OTC) or privately between the borrower and lender. (Investopedia)
- Cash-based assets: Physical money that an individual has access to through a savings account or checking account.
Profit-sharing
A type of employer-sponsored defined contribution plan that allows an employer to make contributions to an employee’s account from a company’s annual profits, although an employer is not required to make contributions in any given year.
