In contrast to Germany, where the so-called Riester pension does not find much appeal, the American equivalent, the so-called 401(k) plan, is practically a given for anyone who does not intend to sleep in a cardboard box under a bridge in old age. The funny name is derived from tax code number 401, section (k).

Typically, employers offer a 401(k) plan for middle to higher-paying jobs. In this plan, the employee automatically deducts a certain amount from their gross salary (tax-free!) each month, which is then transferred to private investment companies like Fidelity (www.401k.com). The employee usually has the option to invest the money with varying levels of risk: money market funds (similar in safety to fixed deposits), bonds, or stock funds. However, sometimes only the employer's stocks are available for purchase, which isn't as ideal.

Even though the money is held by private companies like Fidelity, it is subject to the legal regulations for 401k plans. The money grows tax-free because any bond interest and stock fund gains are not taxed. You can manage the account as you wish and move the virtual money -- typically via the internet -- between different types of investments.

When you change employers, you set up a new 401k plan there and maintain it in addition to the old one. A maximum of $12,000 per year can be contributed to the 401k plan, and starting in 2006, this will increase to $15,000. When you are 59, you are allowed to start withdrawing money from your bundle -- however, every cent of it must then be taxed according to your income for that year.

Typically, as an elderly person, you need less money, which is why the tax rate is lower than during your working life. If you go to a financial advisor, they usually calculate how much money you need to deposit monthly and when you can stop working so that the money lasts until the average life expectancy, assuming a positive stock market development, say 10% per year. If you live longer or the stock market crashes, you might end up under a bridge.

Due to the stock market crash of 2000 and the ongoing poor investment climate, the 401k investments of many Americans went in the wrong direction: Instead of the required 10% growth per year, the retirement accounts of those who had invested their pensions in so-called "Aggressive Funds" particularly plummeted. At the same time, many also ran out of household money, which led quite a few to prematurely cash out their bundles, accepting the immediate taxation and a penalty fee.

A good employer supports the retirement provision of their employees with contributions of up to 50% on the payments, up to 6% of the salary -- that is free money, and on top of that, it is also tax-free, as the table in... Rundbrief 11/1999 The phrase "zeigt, ganz schön reinhaut" can be translated to English as "shows that it really packs a punch. 401k-Webseite branches out into all sorts of 401k intricacies

Apart from the 401k plan, there are other retirement options, such as the "Roth IRA," named after a senator named William V. Roth, who strongly advocated for this plan. The Roth IRA can indeed be maintained alongside the 401k. You can contribute up to $3,000 of already taxed money annually to the plan, but you won't have to pay any taxes on interest, stock gains, or withdrawals in retirement. However, high earners who make $110,000 individually or $160,000 as a couple per year are excluded from the Roth IRA. http://www.fairmark.com/rothira/roth101.htm The exact regulations are very complicated, and like all tax laws, can only be understood if you read thick tomes and regularly internalize the latest changes.

And, as always in the USA, there is no equality: Upper and middle-class individuals typically have a 401(k) plan and/or a Roth IRA, while those who earn less need everything for living expenses and cannot save for retirement. They rely on the government retirement safety net, "Social Security," into which both employers and employees contribute 6.2 percent of their gross salary, up to a maximum limit of $87,000 in annual salary (as of 2003). However, one can already calculate the insolvency date of this insurance: 2032.

An interesting twist arises from the population distribution in the age pyramid: In 30 years, it will mainly be foreign immigrants, especially from Latin American countries, who will contribute to the pension system and thus finance the pensions of a predominantly white population group -- racial conflicts are inevitable.

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• More topics you might be interested in:

  	Traffic lights in the space age
  	California Gun Laws
  	The translation of "Kalifornisches Kasperltheater" to English is
  	Topprodukt
  	How much longer?
  	The American school system
  	San Francisco Local: Subway to the Airport