Tuesday, June 17, 2014

Start Cashing In - Chicago Tribune Interview

 ***The content in this post is from a Chicago Tribune article I was interviewed for.  I did not write the content.

Maxing employee retirement benefits

Many Americans 50 or older will need to put saving on a fast track to retire comfortably at age 65.
A great way to do that is to ensure they are seizing every employer-provided opportunity.
According to Rob Austin, director of retirement research at Lincolnshire-based Aon Hewitt, 82 percent of those 50+ take advantage of their employers’ 401k plans.
“So right off the bat, 18 percent are not participating at all,” Austin says. “We see non-savers across every age demographic. Some of that is due to people thinking they can’t afford to save, or not knowing the steps they need to take to participate.
Maximizing retirement savings is entirely possible with a two-step approach. The first step is participating in the 401k plan, Austin says. Step two is to “make sure you’re saving at least robustly enough to qualify for the full employer match,” he adds.
“Eighty percent of those individuals participating in their plans are saving at a rate where they receive the full match from their employers. The pessimistic angle is that one in five — 20 percent — are saving below the level at which they should be saving to receive dollars their employers are offering them.”
Sev Meneshian, president of Public Retirement Planners in Evanston, is one who observes this all too often. “A lot of people don’t take advantage of a 401k match, and it absolutely kills me when I see that,” he says. “Most of the time, if you put in three percent, (employers) will match that.”
Why don’t employees take advantage of what is essentially free money? Some argue they will have to work until they die anyway, so they don’t see the point, Meneshian says.
In other instances, a husband and wife will max out the higher earner’s 401k contribution, and forget about the lower earner’s 401k plan.
That’s a big mistake, Meneshian says. “They’re almost literally leaving money on the table by not taking advantage of that match.”
Other reasons for non-participation is the plan and match aren’t fully explained or the belief they can’t afford to invest.
Employees should be watchful for high internal fees on their investment choices within a plan, says Donald B. Cummings, Jr., managing partner with Blue Haven Capital LLC, an investment advisory firm in Geneva.
The higher the fees, the lower the return. Over a decades-long career investing into a 401k, those lower returns could mean reduced retirement savings.
Also remember the lowest fees aren’t always best, Austin says. Compare the fees with the returns earned. “If you pay higher fees, you may be getting higher returns, in which case the fees are worth it,” he reports.
There are other ways for employees to grow their retirement savings. Employer-paid tuition programs are an example. Many looking to quit their jobs at 55 or 60 will want to transition into second careers.
To do that, they may need to pursue a degree. “They can sharpen their skills, meet new people and possibly have (the tuition) be partially or totally free,” Meneshian says.
Corporate discounts are another area too often overlooked.
“Few people take advantage of them,” Meneshian reports. “Through my wife’s employer, we save 10 percent monthly on our cell phone bills.”
One final suggestion is that older wage earners do some belt-tightening as they get nearer 65. Reducing the amount they’re living on by 10 percent can benefit them both in saving for retirement and during retirement.
“If people tighten their belts while they are still working and save a little more, they get used to living on a slightly smaller amount,” Austin says.

 Securities and advisory services offered through Ausdal Financial Partners, Inc.  Member FINRA/SIPC 5187 Utica Ridge Road Davenport, IA 52807    563-326-2064  www.ausdal.com.  Public Retirement Planners, LLC and Ausdal Financial Partners, Inc. are separately owned and operated.

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