What exactly does a retirement plan cover, and how does it work?

Question

what exactly does a retirement plan cover, and how does it work?

Answer 1

Your question is too vague.  Retirement plans can cover fixed pension, profit sharing, employer sponsored retirement plans (401k, 403b, etc.), depending upon the employer.  In the case of retirement savings plans it is up to you to figure out how to invest and make your money last in retirement (other than suggestions from an adviser).

A pension sounds good, but with underfunding and companies going out of business, that is not always a sure thing, and it depends whether it keeps up with inflation.  So companies are leaning towards retirement savings plans, where you have a hand in how your money is invested, and will hopefully have something that nobody else can touch.

Answer 2

A retirement plan is basically a savings account.  It can cover anything you want - until you run out of money.