The benefit is based on the ending salary. This means that the real dollar value of the retirement benefit will reduce during retirement.
Imagine the same situation as above, but now you work for two employers during your career: You work for Employer A for the first 24 years, and Employer B for the second 24 years. Everything else in the problem is the same. Calculate your retirement salary from Employer A, from Employer B, and the total of the two retirement salaries. (Note that throughout your career, you receive a raise of 5.0% every year, even if you change employers, and you never loose salary when you change employers.
Is a defined benefit a good plan if you do not stay with the company for your whole career? A defined benefit is not good if you do not stay with the company for your whole life because once you leave before the benefits are they vested, you may even lose the whole benefits or part of it if you worked for less than five years.
If you work at a company for a whole career, you retire on your defined benefit salary, and the firm goes bankrupt, can the firm’s obligation to retirees like yourself be lowered, i.e. can retirees be left with a lowered retirement salary by the bankruptcy judge?
Once the employer decides to offer the defined befits the company has no obligation to take back the benefit since it belongs to the retirees, hence incase the company goes bankruptcy, the retirees retirement benefits will not be