Have More Money for Your Golden Years with Retirement Made Simpler
By: States: Florida Source: AARP.org Date Posted: 2007-12-11 09:37:02.906220-05:00
It's human nature to procrastinate about saving for retirement. But a new program is making it dramatically easier for workers to save enough money to enjoy their golden years.
Retirement Made Simpler is spreading throughout the country. Its common-sense benefits make it easier for employees to get more money out of their 401(k) plans upon retirement—because it makes it simpler to put money in. The program, proposed by AARP, the Financial Industry Regulatory Authority, and the Retirement Security Program, gives employees a needed nudge to help them save enough money for a successful retirement.
Starting out, an employee is automatically enrolled into their company's 401(k) program unless they opt-out within a specified time. After being enrolled, a specified percentage of an enrolled employee's pay is automatically deferred into the organization's 401(k) plan. Many plans automatically increase the contribution rate over time, known as "automatic escalation." As part of the program, employee contributions are automatically directed to a pre-determined "default" investment such as a balanced fund, lifecycle fund, or professionally managed fund. If an employee wants to change the allocation, or withdraw from the fund, they can do so.
Studies show that employees react favorably to Retirement Made Simpler. Harris Interactive® conducted a survey on behalf of Retirement Made Simpler gauging employee satisfaction with the new 401(k) program. The study found that 98 percent of U.S. adults currently enrolled in an automatic 401(k) plan are glad their companies offer this savings vehicle, with nearly four in five (79 percent) of them expressing strong agreement. In addition, of those who were automatically enrolled, only seven percent opted out of the plan.
The study also found that 95 percent of adults in automatic 401(k) plans agree that automatic enrollment has made saving for retirement easy and 85 percent agree that it has helped them start saving for retirement earlier than they had planned.
As one of its three sponsors, AARP knows how important this program is in terms of improving employee retirement savings.
"AARP is committed to automating savings programs. As the responsibility of saving for retirement falls more to the individual, it's imperative that employers and employees do all they can to enhance savings and ensure financially secure futures," said Bill Novelli, Chief Executive Officer of AARP.
In addition to making it easier to start saving earlier, the program also gives employees a way to make decisions quickly and easily, avoiding the feeling of being overwhelmed when faced with sorting through all the investment options in front of them.
Success stories are already being reported by companies nationwide. You can read about these stories as well as gain information on benefits of the program by going to RetirementMadeSimpler.org.
If you're the employer who values your workers, start showing it with Retirement Made Simpler.
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