A common metaphor for the elements of a good retirement plan is the three-legged stool. The three legs of the stool can be thought of as:
- Social Security
- Employer-sponsored retirement plan
- Personal savings and assets (IRAs, CDs, home equity, etc.)
A stool with one leg will fall. With two legs, keeping your stool up will be a delicate balancing act, while with three strong legs, you will have the greatest chance of not falling off your seat. Strengthen all legs as much as possible. Social Security will likely provide you with one strong leg, but without an employer-sponsored retirement plan and/or adequate personal savings, you may not have enough money to pay for post-retirement expenditures.
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