Posts Tagged ‘FMi’

Key questions (and answers) for Plan Sponsors

Monday, April 7th, 2014

Q: Is there a relationship between automatic enrollment and employer decisions about matching contributions and total compensation?

A: Recent research by the Center for Retirement Research at Boston College (CRR) found that auto-enrollment is related to relatively low employer match rates and default rates, but not overall compensation. The How Does 401(k) Auto-Enrollment Relate to the Employer Match and Total Compensation? report indicates that auto-enrollment plans had a matching rate of about 0.4 percentage points less than plans without auto-enrollment, even taking into account other factors.

The researchers also investigated whether low-default contribution rates adopted by employers who have auto-enrollment in their plans. It appears that employers who have this feature may be using a relatively low default rate, with resulting lower matching, to offset the higher costs that occur from higher participation rates found in auto-enrollment plans. 
The study concluded that auto-enrollment increases saving for workers who would not have participated in the plan without that provision. However, employees who would have participated in the absence of auto-enrollment may, over time, save less because of relatively low employer match rates.


Employers: How does your plan compare?

Sunday, March 23rd, 2014

The good news is that the Participant Deferral Rate rose slightly year on year.

The average participation rate in 401(k) plans was 88% at the end of 2012, according to the 56th Annual Survey of Profit Sharing and 401(k) Plans by the Plan Sponsor Council of America (PSCA). The rate is defined as the average percentage of eligible employees who had a balance in the plan, as the average number of investment choices offered to participants remained at 19 across all employer plans.

The year before the rate was 86%. An average of nearly 81% of eligible employees made contributions to the plan in 2012. The average participant pre-tax deferral rate was 6.8%, compared to 6.4% the year before.  Here are some highlights:


Saving for College 101: It’s a lot easier course when you take it today

Thursday, March 6th, 2014

Good news is that college expenses show signs of leveling off but that’s hardly a reason to hold off on planning for the inevitable costs down the road

Your kid’s college may be years away but the old adage of “They grow up so fast!” holds especially true when planning for the event in the context of your retirement goals.  Here is a list of 7 tips that can lessen to the blow:

Get your retirement in order first – Your kids will have access to more sources of college money than you will once you stop working, so make sure you’re on the right path for your own retirement before you set aside money for college. (more…)

Caring for your health over the long-term today

Wednesday, February 19th, 2014

According to the U.S. Department of Health and Human Services, 70% of people turning 65 can expect to use some form of long-term care during their lives. But less than one-third of Americans 50+ have begun saving for long-term care.

Long-term care includes a range of personal daily living services. Most long-term care isn’t related to medical care, but rather assistance with daily bathing, dressing, using the toilet or eating. Other common long-term supports include help with housework, managing money, taking medication and shopping.

Many Americans mistakenly believe that Medicare pays for the bulk of long-term care. In fact, Medicare only pays for long-term care if you require skilled services or rehabilitative services, and it will only do so in a nursing home for a maximum of 100 days (the average is 22 days), or at home for a much shorter period.


3 Easy Ways To Tune-Up Your 401(k) For Spring

Friday, February 7th, 2014

Like every other important investment in your life, a fresh spring look can help you make small but important adjustments that pay off down the road.

Spring has finally sprung for most of the country after what was a winter to remember.  What better time to take a good look at your 401(k)-type plan. Here are three simple tips:

Make A Rational Use of the Menu of Funds. Just because your plan offers 30 choices doesn’t mean that you have to invest in every fund. More is not better when arriving at
diversified allocation.

But how much do you put in each fund? Some people are naïve about diversification. If they have 10 selections, they invest 10% in each, which may sound rational, but isn’t.

Instead, split your money between stocks and bonds according to your age. Your percentage in income investments should roughly each your age. If you’re 25, for example, then 25% should be in bonds.


Having Plan B in place if you become a statistic.

Saturday, January 25th, 2014

It’s happening to an increasing number of people of a certain age. It happens late in the prime of working life and just when you think you’ve got a solid nest egg for retirement, you lose your job.

Losing a job late in life is not a rare experience; older workers find more challenges than their younger counterparts in trying to get back to the workforce, if ever, and certainly not at their
previous level.

“I have seen an alarming number of my friends’ parents being laid off,” says Kelley Long, a spokeswoman for the National CPA Financial Literacy Commission, certified financial planner and director of communications and marketing for Chicago-based accounting firm Shepard Schwartz & Harris.


You’re out of college and landed your first job. Now what?

Friday, January 10th, 2014

First, congratulations! If you believe the statistics consider yourself lucky to have overcome seriously competitive odds.  This real opportunity lets you put in place a few basic retirement goals.  The earlier you do it the easier it gets.

College graduates who are about to begin their careers will face an overwhelming number of financial choices, including how best to save for retirement.

The newly employed have one or more retirement account options from which to choose, including Roth IRAs, traditional IRAs, and traditional 401(k) plans, that may or may not have a Roth 401(k) option, say the authors of a new paper on the subject.

Many young workers likely have employers that provide a matching contribution, according Gregory Geisler, an associate professor of accounting at the University of Missouri Saint Louis and Jerry Stern, a professor of accounting at Indiana University-Bloomington.


Lift Off for Retirement

Monday, December 2nd, 2013

Decades ago, workers could count on a company pension, Social Security and Medicare to carry them through retirement. Today’s retirees may need to rely more on personal savings.

There’s something both powerful and serene about seeing hot-air balloons rising in the morning stillness, their burners propelling colorful shapes into the atmosphere. Retirement is a lot like untethered flight—life’s possibilities are limited only by your imagination and where the wind takes you. At one time you could count on the three “balloons” of a pension, Social Security and Medicare benefits, but you will likely need to rely more on your personal savings to fund your dreams once you retire.


The Not-So-Hidden Cost of Inflation

Friday, November 8th, 2013

When Gladys retired from the phone company in 1997 at age 60, she was very happy with her $800-per-month pension and the $1,200 per month she was earning from certificates of deposit. Her monthly expenses were about $1,500, which left enough for an occasional trip.

Fifteen years later, Gladys is still collecting $800 per month from her pension, but only $900 a month in interest from her CDs. Her monthly living expenses now are $2,400, and she has been dipping into her principal to cover the difference. She’s justifiably anxious about outliving her money.


What College Students Should Know About Retirement

Tuesday, September 10th, 2013

College students and recent graduates face particular challenges in saving and planning for retirement. Daunting student loans, a still-uncertain job market and competition for jobs among fellow graduates may all seem far more pressing than a retirement decades down the line, but that doesn’t mean post-career planning should be put to the wayside. Here’s what college students should know about retirement:

Start saving young. Saving early and capitalizing on years of compounding interest is key to retiring comfortably. “[The] most important thing to remember is that [students] will, in fact, retire someday,” says Mark Helm, a certified financial planner in Falls Church, Va. “They can either get one of the great forces of nature – compound interest – to work for them, or they can get started late and fight that beast for 30 years.”

One of the initial steps toward a successful retirement is one many students feel they’ve had enough of: education. Most students haven’t learned to deal with their finances properly, according to Robert Fragasso, CEO of Fragasso Financial Advisors in Pittsburgh, and that’s the first hurdle to a healthy retirement.