Women's Institute For A Secure Retirement

It’s National Save for Retirement Week 2012! A week dedicated to building knowledge and taking action toward securing your retirement. Each day this week we are going to look at a different contributing factor to retirement and help you increase your understanding of it so that you can take action and be prepared. Today we are looking at company benefit plans.

One of the best ways to save for retirement is through your company’s benefits plan. What is especially great about employer-sponsored retirement plans is that employers often match a percentage of your contribution to your accounts.  If you don’t contribute at least enough to get the full match, it’s like leaving money on the table!  In additional to retirement benefits, employer-sponsored benefits can include health, disability, life, long-term care and flexible spending accounts. A typical benefits package is worth a lot, often as much as 25% of an employee’s income.  It is up to you to know what your employer provides and to take advantage of those opportunities to help protect your future. Read WISER’s booklet called 20 Ways to Take Advantage of your Company Benefits Plan to learn more about different benefits and how you should approach them.

While some employers offer retirement plans that provide a guaranteed amount of income per month for life when you retire (also called “defined benefit” plans), most now offer defined contribution plans, which include retirement plans like 401(k) and 403(b) plans.  Since you are ultimately responsible in defined contribution plans for how your money is invested and ultimately managed as retirement income, you need to become familiar with your plan, the investing options available, as well as what fees are associated with your plan.  Check out the WISER defined contribution plans webpage and follow our Related Resources links. Also read our special report, Make Sure You Know the Ins and Outs of Your 401(k) Plan.

For more information, our five-minute podcast “Work those Work-Based Retirement Savings Plans!” covers the basics of employment-based retirement savings plans, including employer matching contributions, investment options, how to avoid tax penalties when you change jobs and how 401(k) and 403(b) plans work. Also listen to our “Know What You Have: Workplace Pensions” podcast to learn about defined benefit pension plans.

Taking full advantage of company benefits plans is strongly recommended if your employer offers them.  Many people, however, do not have access to such plans, either because their company doesn’t offer them or they haven’t worked enough years or work part-time and are not eligible.  If this is the case, you should still look into ways to contribute earnings to a retirement account.  Individual Retirement Accounts (IRAs) might be a good option for you.  As with any investment though, you need to do your homework to learn about the different types of IRAs so you can determine what is best for you.  Check out WISER’s fact sheet Roth IRAs.

Now that we’ve covered the basics of company benefits plans, check back tomorrow for more information about other types of investing!