Retirement Basics
An egg and money in a bird's nest with at $1 bill in the background
Those with a pension still need to save

You know the maxim: If you want something done right, do it yourself.

That's especially true when it comes to saving for retirement, no matter what kind of benefits your employer may provide. In fact, before you count on company-provided perks, be sure you've really earned them. You could be in for a nasty shock.

Sixty-two percent of workers expect to receive income from a traditional pension plan when they reach retirement, according to a recent study by the Employee Benefit Research Institute, or EBRI. But just 41 percent of individuals surveyed by EBRI were enrolled in such a plan.

Moreover, enrollment in a retirement plan, be it a pension or the increasingly popular 401(k) variety, doesn't guarantee that you'll get hefty employer contributions. After all, you've got to clear certain hurdles before you can keep those perks.

Hurdles to clear
Be vigilant with your retirement plan; certain rules and restrictions apply.
  1. Vesting periods.
  2. Company match requirements.
  3. Signing up.
  4. Slow-growth investments.

Hurdle No. 1: Vesting periods

That's the amount of time you need to work before you get to keep pension, 401(k) or other retirement assets contributed by your employer. On average, 401(k) plans let workers vest gradually, over a five-year period, until they earn the right to keep all of their employers' contributions, according to the Profit Sharing/ 401(k) Council of America, or PSCA.

But with pensions, the period can be longer, says PSCA president David Wray. With a 401(k) you can be vested in three years, he says. "Or you can be gradually vested over time for a period that doesn't exceed six years. But with a pension, you can have a plan where you're not vested at all until after five years or you're gradually vested over seven years," says Wray.

Older workers tend to stick around until they qualify to keep all their employer-paid benefits -- "about 14 years for their last job on average," says Wray.


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