Does Your Company Offer a Retirement Plan? - LPL



Ghostwritten Article | Does Your Company Offer a Retirement Plan? – LPL Must be used with your Advertising Review Team approved letterhead or email signature.LPL Compliance Approval # 1-902729The attached has been given an 'Approved As Is' status by the Advertising Review Team. Advisors who are interested in using and/or customizing pre-approved materials should ensure an understanding of the Pre-Approved Communications section of the Advisor Compliance Manual posted on ClientWorks. This section of the compliance manual includes instructions on how to use pre-approved materials and meet the necessary Books and Records requirements.Does Your Company Offer a Retirement Plan?One of the most discussed topics in the United States is retirement security. Few Americans have set aside enough savings to live comfortably throughout retirement. In fact, the Center for Retirement Research at Boston College found:“…half of today’s households will not have enough retirement income to maintain their pre-retirement standard of living, even if they work to age 65 and annuitize all their financial assets, including the receipts from a reverse mortgage on their homes. This analysis clearly confirms that many of today’s workers need to save more and/or work longer to achieve a secure retirement.” 1One of the easiest ways to save for retirement is in an employer’s plan. However, not everyone has the opportunity to do so.You may not have realized it, but less than 10 percent of private sector companies offer pension plans, and not quite 50 percent offer 401(k) or similar types of retirement plans. As a result, a significant number of working Americans don’t have a chance to save for retirement in a workplace plan.23 In fact, roughly 40 million working Americans lack access to a workplace retirement plan.23If you’re not sure whether your employer offers a plan, ask. If it does, gather as much information about the plan as you can. Here are a few questions to ask: What type of retirement plan is available? Some companies offer more than one type of retirement plan. If you work for a large company, you may have access to a pension plan and/or a 401(k) plan. If you work for a smaller firm, you may have access to a SIMPLE IRA (Savings Incentive Match Plan for Employees Individual Retirement Account), SEP IRA (Simplified Employee Pension Individual Retirement Arrangement), or payroll deduction IRA (Individual Retirement Account). If you work for the Federal Government or a state government, you will have an entirely different set of retirement savings options.Make sure you know what plans are available and when you are eligible to participate. Human Resources (HR) should have the information you need.Will your retirement income be taxable or tax-free? Your company’s 401(k) plan may allow different types of contributions. For instance, you may be able to make:Traditional contributions. These contributions are made before taxes, so they may help reduce taxes today. Taxes will not be owed on the money contributed and any earnings until money is distributed from the plan.Roth contributions. These contributions are made with after-tax dollars, so there is no tax break today. However, contributions and any earnings are tax-free when you withdraw them, as long as the distributions are qualified.**After-tax contributions. These contributions may be available to those fortunate individuals who can afford to contribute the maximum to a workplace plan and still save more. As long as IRS rules are met, after-tax contributions may be transferred into Roth IRAs and deliver tax-free retirement income.5It has been recommended Americans save 10 to 15 percent of their income for retirement.6 Not everyone can save that much, but it’s important to get started now, especially if your employer makes matching contributions.Does the company make a matching contribution? Some employers make matching contributions. The amount of the matching contribution varies from plan to plan. Regardless, it’s free money you receive just for participating in the plan.For instance, a company might contribute 50 cents for every dollar you contribute, up to 5 percent of pay. If a match is offered, try to contribute enough to receive the full match. Even if you can only save a small amount, receiving the employer match can increase that amount significantly. Once you have gathered information about your plan, there are other questions you’ll need to answer, too:How much should I save? The answer is likely to be: As much as you can afford to save. Let’s face it. The future is unknown. There are a lot of variables to consider when planning for retirement. For example, no one can be certain:How long they will be able to work How long they will live How investment markets will performWhat may happen between now and thenAs a result, it’s wise to save more rather than less. If you save more than you can spend, that’s wonderful. The assets you leave behind can help your spouse/partner, children, grandchildren, or favorite charity. Another way to approach the question of how much to save is to determine a replacement ratio. How much of your current income will you need to live comfortably each year in retirement? Once you have a number, you can determine how much to save today. How should I invest my savings? Once you’ve decided how much to save, you’ll need to determine how to invest your savings. Many workplace retirement plans offer diverse options such as stocks, bonds, and other investments. Each investment offers distinct risks and rewards.Before you choose investments, decide how much risk you are comfortable taking. In general, people who are further from retirement can tolerate more risk than people who are close to retirement. If your employer offers a workplace retirement plan, count yourself fortunate and consider signing up. If you don’t have access to a workplace retirement plan consider the benefits of setting up a Roth IRA or traditional IRA to save for retirement in a tax advantaged manner. Don’t let uncertainty about how much to save or where to invest prevent you from participating. We are happy to help you calculate a replacement ratio, decide how much to save, and evaluate investment choices. Just give us a call.* The NRRI estimate includes income from Social Security benefits, retirement plans, non-retirement plan savings, and homes. It does not include income from work in retirement.1**Withdrawals of contributions and earnings from a designated Roth 401(k) account are tax-free and penalty-free as long as the account is held for at least five (5) years and distributions are made at age 59-1/2 or later, or because of disability or death.3Sources:1 (Pages 1-2, 7)2 offered through “Your B/D Name Here”, member FINRA/SIPC.This material was prepared by Carson Coaching. Carson Coaching is not affiliated with the named broker/dealer or firm. ................
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