Answer: A pension plan is a retirement savings option typically offered by employers, where employees receive a fixed amount of income during their retirement years. The amount is usually based on factors such as the employee’s salary, years of service, and a predetermined formula set by the plan.

Answer: A 401(k) plan is a retirement savings option that allows employees to contribute a portion of their salary into a tax-advantaged investment account. The contributions are often matched by the employer up to a certain percentage. The funds in the account can be invested in various assets such as stocks, bonds, and mutual funds, giving individuals control over their investment choices.

Answer: Some advantages of a pension plan include a guaranteed income for life, regardless of market fluctuations, and the ability to receive benefits even if the employee lives longer than expected. Pension plans are also managed by professionals, reducing the individual’s investment responsibility.

Answer: Some advantages of a 401(k) plan include the ability to control investment choices, the potential for higher returns through wise investment decisions, and the flexibility to change jobs without losing the savings. Additionally, 401(k) plans often come with employer matching contributions, which can significantly boost the retirement savings.

Answer: Pension plans are becoming less common, especially in the private sector. Many employers have shifted towards 401(k) plans as they are less expensive to manage and provide more flexibility for both the employer and the employee. However, pension plans are still prevalent in some industries and government sectors.

Answer: The best retirement savings option depends on individual circumstances and preferences. Pension plans offer a guaranteed income, making them appealing for individuals seeking stability and security. On the other hand, 401(k) plans provide more control and flexibility over investments. It is often recommended to have a diversified retirement portfolio that includes a mix of both pension plans and 401(k) plans, if available.