In the old days, you were employed by one company your whole working life. In return for your loyalty, the company paid you a pension when you retired at age 65. The combination of the company pension, social security payments from the government, and personal savings enabled many to have a reasonably comfortable retirement.

Those days are gone for the majority of workers. Today, companies have switched from fixed benefit programs to fixed contribution programs. In a fixed contribution plan, a company will match a certain percent of the money an employee places into a retirement investment account.  That matching money is the fixed contribution by the company. When the employee retires, however, there is no fixed monthly benefit. The amount of money in the retirement investment account will depend largely on how much money the employee contributed. Instead of being a fixed benefit, it is a variable benefit. It varies depending on how much money was contributed. Of course, it also varies on how well the investment account is doing.

If you regularly contribute the maximum allowed into a retirement account, around 15% of your salary, and you do it for enough years,  there is a good chance that you will have enough for a comfortable retirement. However, many people do not contribute the maximum amount and many people contribute nothing. But no matter how much you do or do not contribute, there is no guarantee that the combination of the retirement account, social security payments, and personal savings will finance a comfortable retirement.

If you do not have enough money when it comes time to retire, you only have a few options. You can retire at a later age. You can work a part-time job instead of retiring completely. Or you can reduce your expenses. Expenses can be reduced by spending less on a day-to-day basis or even by moving to a less expensive part of the country.

I am working for a company that has a fixed contribution retirement plan. I am allowed to put up to 15% of my pretax earnings into the plan each month. That money does not get taxed until I start drawing from it when I retire. The company matches the first 4% that I save dollar for dollar. The plan offers over 20 stock and bond funds. Because my wife has a good job, we can afford to sock away the full 15% every month. I figure my investments will average 7% growth each year. That means they should be worth over 1 million dollars when I retire in 25 years. 

If I decide to leave the company, all the money I have invested is still mine. If I have worked at the company at least 5 years, all the money the company put in also stays in my account. A traditional pension benefit was better in some ways. But it was worse in other ways. The good part was that the company did 100% of the funding. Also, you knew exactly what your monthly pension would be. It depended on how much you earned and how long you were at the company. The bad part was that if you left the company, you would lose a big portion of the benefit. Or you could even get no benefit at all.

I prefer this new system. But I worry about my best friend at work. He says he cannot afford to put any money away.  Not even the 4% that gets matched. He is up to his nose in credit card debt. He doesn't seem able to cut back on his spending. He will be in a bad way if he doesn't change his habits. He could end up having to work past age 65. He may have to work until he drops dead.

I am working for a company that has a fixed contribution retirement plan.

I'm employed by a company that offers a fixed contribution retirement plan.

The company matches the first 4% that I save dollar for dollar.

The company makes a dollar for dollar match for the first 4% that I save.

The plan offers over 20 stock and bond funds.

Over 20 stock and bond funds are offered in the plan.

I figure my investments will average 7% growth per year.

I am figuring that my investments will have an average annual growth of 7%.

A traditional pension benefit was better in some ways.

The kind of pension benefit they used to have was better in some ways.

But it was worse in other ways.

But it had disadvantages in other ways.

The good part was that the company did 100% of the funding.

On the plus side, it was 100% company funded.

I prefer this new system.

I like the new system better.

I worry about my friend at work.

I'm concerned about my friend at work.

He is up to his nose in credit card debt.

He is over his head in credit card debt.

He doesn't seem able to cut back on his spending.

He can't seem to scale down his spending.

He will be in a bad way if he doesn't change his habits.

He'll be up the creek if he doesn't start behaving differently.

He could end up having to work past age 65.

He may be obligated to work after he hits 65.

He may have to work until he drops dead.

He may have to work until the day he dies.

Last week my wife and I flew from Los Angeles to New York City for a wedding. Everything went well except for the flight home. We got to the airport in plenty of time. We got boarding passes and checked our bags with no trouble. The security lines weren't  bad. We had enough time for a relaxing meal in a fairly nice restaurant.

The plane started boarding at 3:30 for the 4 o'clock flight. The plane was packed. Right at 4 o'clock the captain's voice came over the loudspeaker. He said there was something wrong with the plane and everybody had to get off.

It was almost impossible to get any information about what to do. We went over to a gate where there was a 5 o'clock flight to Los Angeles. We discovered that that plane also had a mechanical problem. They announced that our original 4 o'clock flight would leave at 8:45 pm. We signed up as stand-bys for a 6 o'clock flight and were given seats. We got into Los Angeles at 9 pm Pacific Time. Our luggage was on the original plane. The luggage was delivered to our house the next morning.

Last week my wife and I flew from Los Angeles to New York City for a wedding.

Last week my wife and I made the trip from Los Angeles to New York City for a wedding.

Everything went well except for the flight home.

Everything went smoothly until the flight home.

We got to the airport in plenty of time.

We arrived at the airport with time to spare.

We got boarding passes and checked our bags with no trouble.

Getting boarding passes and checking our bags was no problem.

The security lines weren't  bad.

The lines for the security check were not overly long.

We had enough time for a relaxing meal in a fairly nice restaurant.

There was time for a leisurely meal in a not-bad restaurant.

The plane started boarding at 3:20 for the 4 o'clock flight.

They started boarding our plane at 20 past three for the 4 o'clock flight.

The plane was packed.

Every seat in the plane was taken.

Right at 4 o'clock the captain's voice came over the loudspeaker.

On the dot of 4 the captain made an announcement.

He said there was something wrong with the plane and everybody had to get off.

He said the plane had a problem and everyone had to disembark.

It was almost impossible to get any information about what to do.

Information about travel alternatives was very scarce.

We went over to a gate where there was a 5 o'clock flight to Los Angeles.

We walked to a gate where there was a 5 o'clock flight to Los Angeles.

We discovered that that plane also had a mechanical problem.

We found out that that plane also had mechanical trouble.

They announced that our original 4 o'clock flight would leave at 8:45 pm.

The announcement came that our original 4 o'clock plane was rescheduled for 8:45 pm.

We signed up as stand-bys for a 6 o'clock flight and were given seats.

We got listed as stand-bys for a 6 o'clock plane and were able to board.

We got into Los Angeles at 9 pm Pacific Time.

We landed in Los Angeles at 9 pm Pacific Time.

Our luggage was on the original plane.

Our bags were on the original plane.

The luggage was delivered to our house the next morning.

The bags were brought to our house the next morning.

Focus on Vocabulary

We packed our bags for the trip

We packed a lot of activities into the weekend.

The nurse packed Jennie's swollen ankle with ice.

We packed our tents over a five mile trail.

That rock band always packs them in.

He packs a gun when he hikes in the back country of Alaska.

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