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Article: Pensions, Plan Types and Policy Approaches
- Article from:
- Encyclopedia of Aging
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CopyrightCOPYRIGHT 2002 The Gale Group Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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PENSIONS, PLAN TYPES AND POLICY APPROACHES
The U.S. retirement income system is analagous to a three-legged stool. The first leg is the public Social Security system, which covers virtually all workers and provides benefits based on lifetime earnings at sixty-five, and reduced benefits at sixty-two. The second leg consists of employer-provided supplementary pensions, which cover roughly half the workforce. These tax-subsidized plans are sponsored by private employers, by the federal government for its employees, and by state and local governments for their workers. The third leg consists of individual saving, which occurs in tax-subsidized Individual Retirement Accounts or directly in ...