If you want to know exactly how much money you will have when you retire, which type of retirement plan should you choose?

A pension plan is the correct choice for understanding exactly how much money you will have upon retirement because it typically guarantees a specified monthly benefit once you retire. This benefit is often based on a formula that takes into account factors such as salary history and years of service, providing clarity and predictability regarding your retirement income.

In contrast, while a 401(k) plan and a defined contribution plan allow for the accumulation of retirement savings, the final amount you have at retirement can be uncertain, as it depends heavily on investment performance and contribution levels over time. Similarly, a Roth IRA, while it offers tax advantages and can grow tax-free, is also subject to market fluctuations and does not guarantee a specific retirement payout. This variability in both the 401(k) and Roth IRA accounts means that you cannot know exactly how much money you will have at retirement until you access those funds, unlike the guaranteed income from a pension plan.