By: Gary Zurek
Do you know how much money is needed for your retirement? Do your participants know how much they need? Retirement readiness…what does that mean?
There are many Baby Boomers turning 65 this year who now know they don’t have enough money for retirement. This year (2011) is the beginning of the Baby Boomer generation turning 65. Over the next 20 years, 78 million Americans will turn 65. Sixty-five has, in the past, been synonymous with retirement. However, a recent article in the Wall Street Journal entitled “Retiring Boomers Find 401k Plans Fall Short” talks about the lack of retirement preparedness. According to the article the typical pre-retirement baby boomer has less than 25% of what he/she needs in a 401k plan to retire.
Why are they so woefully unprepared for retirement? There are many reasons for this problem including procrastination, boomer imprudence, participant loans, apathy, too little investment advice and too little being saved. I believe the number one reason is the fact that too little money is being saved for retirement. Unfortunately, many boomers will either need to work longer than they anticipated or scale back their lifestyle to conserve their retirement funds.
While the boomer generation, particularly those over 55, may not be in a position to change their retirement readiness, there is still time for younger boomers, Gen Xer’s and Gen Yer’s to achieve an adequate retirement benefit. How? It’s called Retirement Planning.
I am constantly reading about all of the participant features that produce a great 401k plan: online annual contribution increase, take-home pay calculator, custom date portfolio returns and more. All of these items are wonderful features and tools but none of them provides the one thing that every participant needs to know: How much money do I need in my 401k account to achieve a meaningful retirement benefit. Once a participant knows how much money he/she needs in their account they can then, with the help of their investment adviser, establish a plan on how to get there. You notice I said “a plan”. For all of the talk about features and educating the participants on how to invest we miss the most important piece – planning. You may have heard this before but we, as Americans, spend more time planning our vacations than we do our retirement readiness.
As a reminder, TSC’s 401k Health Check™ provides the piece of information that participants are often missing to enable them to plan. It tells the participant if they are on track to save and achieve a meaningful retirement benefit. In addition to the Health Check, our website has a retirement benefit calculator which allows participants to customize their benefit package based on investments held outside their 401k account. Go to www.tsc401k.com, with your Health Check and see how you measure up for your retirement.
The only way to have a meaningful retirement benefit is to plan for it. At TSC, we make corporate retirement plans easy… Ask your participants the simple question: do you know what you’ll need to be retirement ready? Help your participants plan today for retirement before they are “sixty-five”.
Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.