AARP Illinois Tackles Financial Security
By: Source: AARP.org Date Posted: 2007-11-12 15:52:26.959069-05:00
Lifetime financial security is a cornerstone of the American dream, but it is a dream that is becoming harder to realize for many Americans reaching retirement age. Too many people do not understand basic financial concepts and frequently underestimate the amount of money needed to ensure a secure retirement; too many people can't afford to retire.
Defined contribution plans, such as 401(k) plans, are a good tool to help build financial security for retirement. Yet, three out of 10 employees choose not to participate in these employer-sponsored savings plans - with many employers matching contributions, employees are simply leaving money on the table.
It's important for community and business leaders, employers and employees to start working together to address financial security issues. Adopting automatic enrollment in 401(k) plans will help employees have a better start on saving for retirement. Participation is automatic but not mandatory - employees who don't want to participate can simply opt out of the program.
AARP Illinois is working with community and business leader, including the U.S. Department of Labor Women's Bureau to form a broad statewide coalition to tackle the problem. The coalition has begun to take up measures like auto-enrollment in 401(k) plans - and is helping employees and businesses to look for solutions to the retirement gap - implementing such programs as a new Web site, Retirement Made Simpler, to better help employers and employees understand what it will take to retire.
A secure retirement must be supported by four pillars:
- (1) Social Security
- (2) pension and savings
- (3) continued earnings
- (4) adequate and affordable health insurance
Each of these pillars faces mounting pressures in today's financial landscape.
Auto-enrolling in a 401(k) is one way for employees to take charge of their financial future. Pensions are disappearing, people aren't saving enough for retirement and with rising health care costs it's getting much more difficult for most to even think about not working - but simple steps now can help ensure a healthy and secure retirement later.
To see where you stack up in preparing for your financial future, please check out AARP's Retirement Planning Calculator; a tool that allows you to estimate your financial readiness for retirement.
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