Pension plans have become expensive because of the downward trend, so people are looking for a way to get rid of that definitive cost, says Gerald Simon, financial advisor with Simon and Simon, in Covington, Louisiana. 401K's have a structure that is less stringent, as contributions can vary by year and some are self-contributory.
Without the use of a defined benefit plan, the costs of a retirement plan is split between the employer and the employee, says Simon. He adds that if a guaranteed lifetime income stream is the goal, an employee should consider annuities. An annuity, according to Simon, is the scientific liquidation of both interest and principal over time. He highly advises getting a financial advisor that knows what they're doing.