Many pension plans have been phased out and eliminated by employers because of the immense burden it places on the company. The disadvantage is that the employer is responsible for offering the defined benefit, or a guaranteed income once the employee retires.
Most 401k plans are invested in the stock market and most commonly invested in mutual funds. Employees are also seldom offered any reliable advice from a fiduciary in regards to investing in their 401k’s.
It is also essential to understand that market-based investments carry certain degrees of volatility depending upon your specific investments. This is simply knowing that the market will go up and down at any given time.
Investing in a 401k can also carry some benefits if done correctly. One benefit is the employer match. For example, if your employer is offering up to a 3% match, take advantage of it – that’s free money! But educate yourself and choose investments that suit your needs and goals.