What Do I do? Still have A Work Or Not

Even some HR departments find the details of employee retirement planning a haze: let's not talk about the employees themselves! And the problem is not limited to employees at the lower end of the pay scale. Even PhDs may not understand the difference between a defined-benefit and a defined-contribution plan. Many employees erroneously believe investing in their own company stock to be safer than investing in a diversified stock fund.

The average investor is often overly optimistic, expecting a 16% return in annual gains from the stock market, a level that is way above the average of about 10.5 percent a year. The lack of knowledge about risk and return is worrying. Furthermore, although the key to surviving stock market ups and downs is having a diversified portfolio, it has been shown in the United States that the average person there is invested in only 3.3 funds out of a possible 8,282 mutual funds (Vanguard Group study). If you're ready to start, take on the task of demystifying the retirement system by speaking with your HR manager about your corporate retirement plans. Find out what happens to your contribution in planning different scenarios - stock market crash, discharge from the company, leaving the company, etc. Is there a vesting period for company stock options? How much of company stock are employees' pension plan/fund required to hold? Should there be enough interest in this topic, request that the HR department make a presentation on the topic, or suggest they invite an external financial advisor to talk about the issue to all employees.

Essentially, employers do have the burden of ensuring substantial efforts have been made to clarify how they support your corporate retirement/pension funds or how the company stock option plan works. On your own part, you should try to educate yourself on diversity and asset allocation. You can speak to financial advisors from your local bank on unit trusts, mutual funds or check out their corporate web page for information. Look for website resources on how to plan for your financial future. Speak to people with experience in managing their retirement funds.