 RETIREMENT BY DESIGN: A
HEALTHY RETIREMENT
OUTCOME ....................... 1
 *A MULTI-MILLION DOLLAR
MISTAKE ......................... 2
 PLAN TESTING SEASON 2
IS YOUR PLAN HEALTHY?
Retirement
by design
Retirement by Design: A
Healthy Retirement Outcome
Every New Year’s resolution begins
with a desired change, usually to be
healthier. The gym is packed for the
next few weeks as the “resolutioners”
use the treadmill. Health insurance
companies have multiple ways for
employees to get fit through the use of
preventative care. But what about your
retirement plan? Is it healthy?
The retirement industry has for many
years suggested that educating
employees about the 401k will let them
make informed decisions about savings
and investments. Human Resource
departments have embraced this concept
and remind the employees to save more
every year. Every year, the same thing:
employee meetings and reminders to
save.
It is not working! Americans are
saving less today than 30 years ago.
Employees rarely, if ever, change the
amount they defer to a 401k plan..
Investment selection by 401k plan
participants is the equivalent of a dart
board.
This year, Broad Street will focus the
spotlight of retirement plans on
Retirement by Design: A Healthy
Retirement Outcome. Retirement by
Design is intended to use behavioral
finance to influence a healthy
retirement. A well designed plan
removes from an employee the concern
of when to start, how much to save and
what to invest in.
We believe a retirement plan should
follow inertia like a health plan: you’re
automatically enrolled until you tell us
differently. From there, many designs
continue to follow an automatic patch.
We will touch on several key
components throughout 2015 including
automatic enrollment, stretching the
employer match, programed stepped-up
deferrals, default investments,
generation education and income
solutions.
Promoting a healthy retirement outcome
means your employees will be more
focused on the need to save and less on
things they cannot control like
investment selection and return.
A Multi-Million
Dollar Mistake
Plan Testing
Season
January brings the New Year and
everybody’s favorite, plan testing.
Each year, a plan must complete a
series of tests that compare highly
compensated employees’ deferrals
against non-highly compensated
employees. A testing failure
usually means your highly
compensated employees must
receive a return of part or all of
their 401k deferral. Most
employees who receive a refund
are not pleased with less retirement
savings and more taxes!
If your plan fails, Broad Street can
help with plan design changes that
may be better suited for your
company’s needs. Contact us, so
that we can help you provide a
better Retirement by Design.
Many employers offer a
matching program for their
employees’ 401k savings. And,
as most employers know,
employees don’t take full
advantage of the match, leaving
benefit dollars on the table. But
what is it worth?
In November, CBS
MarketWatch reported that
Boeing employees passed up
matching dollars totaling $98
million in 2013! Nearly 8,400
employees failed to participate in
the 401k and 48,000 didn’t
maximize the match from
Boeing.
Carried forward for 10 years, the
employees will have left nearly
$1 billion in retirement money
behind.
Consider letting your employees
know how much money your
company is offering in match,
not just in percentages, but the
overall dollar amount.
BE ON THE
LOOKOUT
Broad Street has found the many
employees find it easier to
understand a match when
explained in dollar terms.
Provide real paycheck analysis
for an employee and challenge
them to save with several pointed
questions:
1.
Do you know how much
you’ll need to retire?
2.
How will you obtain the
money?
3.
Are you getting all of the
pay (match) that we offer?
4.
Are you willing to give up a
few things now so you have
a healthier retirement later?
Broad Street will host a
WebEx meeting in
March on automatic
enrollment and
escalation. The topic
will focus on the positive
effects on retirement
savings. It will be
presented by Fidelity
Investments. Watch for
your email invitation!