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Don’t Make Me Say I Told You So 9
the 401(k). In these plans, employees make contributions into a
tax-deferred account. In many cases the employer will provide
a contribution as well, usually a percentage of the amount that
the employee contributes. The employee then has options
of where to invest that money, usually company stock, stock
or bond mutual funds, and money market accounts. Defined
contribution plans have become increasingly popular in recent
years because they limit a company’s pension outpay and shift
the liability for investment performance from the company’s
pension plan to employees.
Number of Pension Plans By Plan Type, 1975 – 2016
800,000
65-year-old man 65-year-old woman 65-year-old couple
700,000
600,000
500,000
400,000
De ned Contribution
300,000
200,000
100,000
De ned Bene t
0
1975 1980 1985 1990 1995 2000 2005 2010 2016
Source: U.S. Department of Labor, 2017
Chapter 1: The New Retirement
