The Evolution of Retirement Planning

by Scott Smith, CIMA®

Retirement planningIt should be no surprise that traditional pension plans are a thing of the past. As I believe it should be, retirement planning is the responsibility of the individual, not the employer. Automatic enrollment, automatic annual escalation of salary deferrals, annual opt out requirements for nonparticipants, default investment options into target date retirement funds, performance history and description of investment options and expenses, as well as, employer matching are all meant to increase participation in company 401(k) plans so employees can take responsibility for their own retirement security.

Employee salary deferral limits for 401(k)s and 403(b)s are $18,000 for 2016. Those who are 50 or older can contribute an additional $6,000 a year. According to the Employee Benefit Research Institute, the average and median 401(k) balances were $76,293 and $18,127, respectively, at the end of 2014. 401(k) retirement balances vary significantly by age and years of service.

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