401(k) Retirement Plan
Eight in ten American workers have the opportunity to join employer-sponsored retirement plans. 1
WHY SHOULD YOU JOIN? Just ask anyone who participates in a plan. They’re likely to tell you it’s an effective way to save for retirement. Here are five reasons why:
HOW MUCH IS ENOUGH? A common rule of thumb is that you’ll need to replace 80% of your final working salary to maintain your living standard in retirement – though you could need more or may be able to get by on less. To get there, many financial experts recommend that you steer 10% to 15% of your pay toward retirement. But everyone’s situation is different. You can find out more information by checking your Retirement Wellness Score by going to www.prinicipal.com All full-time and part-time employees of The Standard who have completed the required 90 days of service are eligible to participate in the 401(k) savings plan as long as you are at least 21 years of age. You may contribute up to $18,000 per year (this amount is established each year by the 401(k) Regulations), with a $6,000 “catch -up contribution” for team members 50 years and older. The Standard will match 50% of the first 4% of your contributions once you have met the employer matching eligibility requirements (1 year and 1,000 hours). Plan entry is immediate once you become eligible.
• It’s an investment of your future. You’ll build a nest egg over the long term to supplement Social Security.
• It’s convenient. You’ll contribute every payday through payroll deductions. There are no checks to write; no bills to pay.
• It’s flexible. You may suspend payments and restart them at a later date. You are never locked in to a fixed contribution schedule. • It’s tax-deferred. You’ll reduce your current federal and state income taxes with each contribution. • It’s efficient. You may consolidate retirement accounts from previous employers and roll IRA funds over to your current employer’s plan. Please check with your previous retirement plan provider to see if any fees apply. YOUR INCOME GOAL Most of your retirement income will come from you. Social Security covers only about 38% 2 of the average retiree’s
Online: www.principal.com
income.
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1 The 2010 Retirement Confidence Survey: Confidence Stabilizing, But Preparations Continue to Erode. Employee Benefit Research Institute, March 2010: 18 . 2 The Changing Impact of Social Security on Retirement Income in the United States. Barbara A. Butrica, Howard M. Iams, and Karen E. Smith. Social Security Bulletin taken from ssa.gov. 2003/2004.
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