Retirement is a huge milestone in life. It means the end of working, which can be both a good thing and bad thing. But there’s another consideration as well: what happens to your retirement benefits when you retire? Especially if you work for someone else, it’s unlikely that they’ll continue paying into your retirement account! The best solution is to start up a group retirement plan.  

What is a Group Retirement Plan?

A group retirement plan is a plan that your employer can offer you that allows you to save for retirement in a tax-free account.        

The money you put in is not subject to income or Social Security tax, and you won’t have to pay income tax on the money you take out until sometime in the future.              

What Are The Benefits of a Group Retirement Plan?  

Group retirement plans allow you to save some cash, tax-free. When you leave your job, the money will be waiting for you. There’s no interest earned, but there are no taxes either. Therefore, if you can afford to put in money each month, it can make a huge difference in the amount of money you’ve accumulated for retirement.

Do These Plans Work? 

Yes! They work for everyone. There are people who will get the retirement plan, put in X amount per month each year, and never touch it. Some people put in a little bit every month, and some people will let it sit there untouched.     

Obviously, if you have money sitting idle, there’s only so much you can do with that money before it’s lost. But if you have money sitting in a retirement account that accumulates interest each year, it can last for years to come.            

Are Group Retirement Plans Safe?

It’s much safer than solo accounts. When you put money into a solo retirement account, it’s yours. You can take it out at any time, and potentially even spend the money. With a group retirement account, you have a third party (your employer) taking care of the money for you. Basically, you give up something that’s personally yours in exchange for your employer’s promise to take care of your assets until sometime in the future.

Are There Any Disadvantages?

Well, maybe-but-maybe not. First, most retirement accounts have penalties for taking money out before you’re retirement age. With a group retirement plan, this is less of a concern. But they still need to protect their assets somehow. Therefore, some groups may charge a fee when you take out the money before you hit the retirement age. Second, it’s not always easy to get your employer to create a group retirement plan.

Everyone’s situation is different, so it’s entirely possible that you may have to try to get your employer to create a plan for you for several years before it happens. And finally, most employers do not know how to create a plan. They will never be 100% certain that their group retirement plan is safe and sound, so they will charge an administration fee.

No one will be surprised to learn that systems of “group retirement plan” have been around since the dawn of time. However, when we look at the situation just a few years ago, things seem very different in the world today. Why? Because now “systems of group retirement plan” have become such a common and accepted practice that it is almost becoming the new norm.