Choosing the right pension plan takes a significant amount of consideration. There are a lot of factors to take into account, such as your quality of life, your family’s quality of life, your affordability and many other things.
While the decision does hold a lot of weight, we’ll still try to help you make an informed decision to choose the plan that fits your needs and budget and maintains your quality of life.
BUDGETING AND FINANCIAL PLANNING
Your first step is to sit down and assess your financial standing. Record your expenses, savings, and surplus and assess an amount that you can pay into a pension plan without adversely affecting other aspects of your life. Not only will you have a better understanding of how much you can put into a pension plan, you just might end up improving your financials in the process as you see how much unnecessary things you spend on (we all do).
CREATING A CUSHION
While subscribing to a formal pension plan is a great idea, you should still consider making a financial cushion for any unexpected mishap. Having some money put aside for an unforeseen medical bill or some other emergency is always a good idea, as access to pension plans isn’t guaranteed at all times.
RESEARCHING YOUR OPTIONS
Luckily, with the advent of the internet and the access to information being so simplified, you don’t have to move a lot to do your research. Basic information on plans such as return on investment, investment amounts, and eligibility criteria will be readily available. In fact, with the level of competition in the market, you’re bound to find consumer information on different providers as well to check their rating and how well they provide their services.
You can create a shortlist of providers using your research to see which provider has a plan that fits your needs and budget. You might want to learn more on how to draw from your 401k without penalties..
MEETING WITH YOUR POTENTIAL PROVIDERS
Once you’ve assessed your financial position and shortlisted candidates from your research, its time to visit in person and ask all the questions you have. No question is too stupid! No question is too small! Make sure you clearly understand the arrangement and ask about default events and consequences of default. You don’t want to end up in a situation where you can’t access your funds or lose them altogether.
READING THE FINE PRINT
This part can’t be stressed enough. ALWAYS read the contract in full before you sign the dotted line. Ensure that what you’ve discussed with your provider is adequately covered in the contract and that there are no hidden fees under the arrangement. Once you’ve signed the contract there’s no going back, so it’s better to spend some time reading the terms and conditions than to be sorry at a later time.
Hopefully the above will help you in your decision. Choosing the right pension plan can take a while and you should never take a hasty approach in making such an important decision that is more than likely to affect your quality of life and that of your family’s.
