Comment on Everyday AI looks more like the '08 housing bubble
sugar_in_your_tea@sh.itjust.works 2 weeks agoReally? This is what I see with a simple search:
When you’re able to take your pension, you can choose how and when you want the money. This usually includes the option of taking up to 25% as a tax-free lump sum and using the rest to get a guaranteed or variable income.
Looking more into it, I guess it’s similar?
The 401k typically doesn’t offer the guaranteed income, though I suppose some plans could offer annuities. You can choose to take fixed payments though, but there’s no guarantee how long that will last. I don’t know what the options are in the UK, but in the US, you can do whatever you like, as long as you withdraw the minimum (percentage of assets based on your age, starting at 73).
I see a pension as having some kind of guaranteed benefit. A 401k doesn’t have that, so it doesn’t count.
julietOscarEcho@sh.itjust.works 2 weeks ago
Yeah, again this is just semantics, a 401k in British English is 100% a pension. A UK defined contribution “workplace pension” is just a tax sheltered retirement account until it is annuitized, which is common and sensible but not necessary. The annuity is technically a totally different product, offered by life insurance companies (who interestingly with reference to above conversation would typically hold very little equity exposure backing it). Brits also call the equivalent to the social security retirement benefit the “state pension”. It’s a catch all for assets you use in retirement. Whether that’s used to fund an investment drawdown product or a life annuity or just taken out and splurged on a Ferrari makes no difference.
sugar_in_your_tea@sh.itjust.works 2 weeks ago
Interesting. I think people here would agree Social Security is a state pension, we just only call it by its name.
A pension specifically refers to a plan that makes consistent payments throughout retirement and stops at death (or may pass to the surviving spouse until their death). Anything else is a retirement plan if it’s tax sheltered until some age, or an investment account if it’s not.
I hear annuities are unpopular here, most seem to prefer either a dividend strategy, or sell securities as needed to cover whatever Social Security doesn’t.