Although workers must wait some time for a significant benefit to build up, when it reaches that point, it can whisk them up to a high pension level overnight. Qualitative factors include how well a worker can manage a large amount of money, as well as age, which is one of the most significant factors. Cash-balance plans tend to favor younger employees because they have more time over which their money can compound. Another reason that age is crucial is because of the structure of cash-balance plans. Each paycheck, a percentage of that counts toward your cash balance, so your future pay growth is important.
Older workers tend to be better off in traditional pension plans.
One of the attractions of cash-balance plans is that workers can take what they have in their account with them when they leave their job. That makes the plans ideal for younger workers who tend to be more mobile during their career than older workers. It doesn't get reduced just because of your age. In a traditional pension plan, if a worker leaves before retirement age, the pension is reduced or deferred, he said. Determine if your traditional pension has a financial incentive for early retirement that increases the value of the pension at a certain age, such as 55.