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What is a defined benefit plan?

Defined benefit plans offer guaranteed salary-like payments and were historically offered in order to entice workers to stay with one company for years or even decades. Thanks to the rise of lower-cost defined contribution plans, defined benefit plans are much less prevalent today.

Are defined benefit plans becoming less common?

In an age of defined contribution plans like 401 (k)s, defined benefit plans are becoming less and less common, despite the retirement certainty and security pension plans can offer. How Does a Defined Benefit Plan Work?

Are defined benefit plans better than defined contribution plans?

Defined benefit plans offer greater assurance of some returns, although you could achieve higher earnings by managing your own retirement funds. Defined contribution plans are much more common than defined benefit plans, with 43% of private sector, state and local government workers participating in one.

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