Add Retirement Readiness to Your New Year's Resolutions
06 Dicembre 2007 - 4:00PM
PR Newswire (US)
Reviewing your 401(k) plan regularly will help you stay on track
for retirement CHICAGO, Dec. 6 /PRNewswire-FirstCall/ -- As you
make your 2008 New Year's resolutions, put retirement readiness at
the top of your list, says Aon Consulting Worldwide, the global
human capital consulting organization of Aon Corporation
(NYSE:AOC). According to Aon Consulting's 2007 Benefits and Talent
Survey, 62 percent of employers expect that at least half of their
workforce will not have enough income to retire between the ages of
62 and 65. Being proactive now can help you stay on track for
retirement. (Logo:
http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO) "Unlike
traditional pension plans, we are individually responsible for
controlling our 401(k) plan contributions and investments," said
Susan Alford, executive vice president and National Defined
Contribution Practice Leader with Aon Consulting. "But most of us
have not saved enough or invested sufficiently to retire by age 65,
which forces us to retire without adequate income or continue
working past the age we originally planned. That is why it is of
the utmost importance to review your 401(k) plan on a regular
basis, so you can make the necessary changes to be ready to retire
on time and with the sufficient amount of income." Some resolutions
may be harder to keep than others, so the following are tips for
making and keeping your retirement readiness New Year's resolution.
Be informed and disciplined: Preparing for retirement involves many
moving parts, so it is important to be organized. Make this process
as painless as possible by gathering information about all of your
assets intended for retirement inside and outside the 401(k) plan.
Then, create a spreadsheet that contains the list of assets, where
they are held, the number of units or shares, and the value as of
Jan. 1, 2008. Update this spreadsheet quarterly, as it will act as
a valuable reference when using your plan's financial planning
tools. Use the 401(k) tools available: Use your new spreadsheet to
input information into your 401(k) plan's financial planning tool,
which projects how much income you will need at retirement and how
much you need to contribute regularly to meet that goal. If your
401(k) plan allows Roth 401(k) contributions, use the Web site to
determine whether making contributions on this basis is right for
you. Take action NOW: If possible, increase your contributions,
especially if you are contributing less than the amount your plan
matches. How do you know how much more you can contribute? Set
aside an additional percent of your pay for several pay periods to
see if you can live without that amount. For example, if your
take-home pay is $480, set aside 1 percent -- or $4.80 -- for the
next several pay checks. If you can manage without that amount,
then you know you can easily increase your contribution by 1
percent. (Remember, if you are contributing on a pre-tax basis,
your take-home pay will be reduced by less than $4.80, as in the
example). Do this periodically, and you will quickly increase your
contribution rate by more than you thought possible. Also take
advantage of features such as automatic deferral increases, which
take care of any inertia you might have by letting the plan do the
work, and/or catch-up contributions, which allow plan participants
age 50 or older to contribute an additional $5,000. Understand plan
fees: It is important to understand what fees are being charged to
your account because, over time, these fees can lower the amount
that you will have available for retirement. As a result of pending
regulatory changes, better information is increasingly available.
However, you should pay attention and discuss with your plan
administrator if you either do not understand what you are being
charged or think that the charges are unreasonable. Leave the money
in the plan: Avoid taking in-service withdrawals and loans to pay
for short term needs, such as holiday gifts or other purchases, as
doing so will require you to pay income taxes on withdrawals and
penalties if you are not at least 59 1/2 years old. Loan repayments
are made in after-tax dollars, the interest on the loan payment is
generally not tax deductible, and you will be taxed on the interest
paid when you eventually take a distribution. Understand your
investments: Be informed and make sure you understand the
investments offered in your 401(k) plan, as well as the plan
provisions, such as knowing the maximum deferral amount allowed in
your plan and what percentage of your deferrals are matched. Know
your retirement plans and income needs based on your individual
circumstances. Additionally, if your family status has changed, be
sure to check your beneficiary information and make appropriate
changes. Know where to go for help whether it's the plan's Web
site, hotline or employee communications. Make your investments
work for you: Check your asset allocation to make sure you have a
diversified retirement portfolio with a mix of investments that
matches your desired needs and goals. A diversified portfolio has
characteristics of fixed income, stable value and equity. If you
are unsure how to invest, seek investment guidance by using the
financial planning tools available on your plan's Web site or
designated call center. Consider using target-date asset allocation
funds or life cycle funds if available. These funds automatically
allocate assets among a variety of investment types, reduce equity
exposure (risk) as they near the target date, and rebalance your
portfolio for you. Be prepared: The goal of retirement planning is
to replace income that is lost at retirement. Just how much you
need depends on factors such as how long you live after retirement,
how much inflation will increase your cost of living after
retirement, and what rate of investment return your savings will
produce. As you prepare for semi or full retirement, understand the
stream of income you need and plan accordingly, and understand your
rollover options. No matter how daunting or complicated this
process may seem, you are responsible for your 401(k) and taking
control over the outcome will ensure you are ready to retire on the
date you have planned. Also, consider using an independent
financial planner to confirm your retirement goals, and design a
road map for action to get there. About Aon Aon Corporation
(NYSE:AOC) is the leading global provider of risk management
services, insurance and reinsurance brokerage, human capital and
management consulting, and specialty insurance underwriting.
Through its 43,000 professionals worldwide, Aon readily delivers
distinctive client value via innovative and effective risk
management and workforce productivity solutions. Our
industry-leading global resources, technical expertise and industry
knowledge are delivered locally through more than 500 offices in
more than 120 countries. Aon was ranked by A.M. Best as the number
one global insurance brokerage in 2007 based on brokerage revenues,
and voted best insurance intermediary, best reinsurance
intermediary, and best employee benefits consulting firm in 2007 by
the readers of Business Insurance. For more information on Aon, log
onto http://www.aon.com/. About Aon Consulting Aon Consulting
Worldwide (http://www.aon.com/hcc) is among the top global human
capital consulting firms, with 2006 revenues of $1.282 billion and
6,500 professionals in 117 offices worldwide. Aon Consulting is
shaping the workplace of the future through benefits, talent
management and rewards strategies and solutions. In 2006 and 2007,
Aon Consulting was named the best employee benefit consulting firm
by the readers of Business Insurance magazine. (1) Roth 401(k)
contributions are funded with after-tax dollars, while the
traditional 401(k) is funded with pre-tax dollars. The Roth 401(k)
offers the advantage of a tax free distribution if paid after a
five-year waiting period and meets one of the following after age
50 1/2: death or disability. Media Contacts: Sara Carlson Joe
Micucci 312-381-5045 312-381-4786
http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO
http://photoarchive.ap.org/ DATASOURCE: Aon Corporation CONTACT:
Sara Carlson, +1-312-381-5045, , or Joe Micucci, +1-312-381-4786, ,
both of Aon Corporation Web site: http://www.aon.com/
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