Wayne Braun from People's United Bank joins us to talk about retirement and 401(k) accounts.
Q. Why is employee education on retirement plans important?
A. Well, we are often told that the most expensive purchase is our home, however, I would argue that retirement is our most expense purchase. With the decrease in traditional pension plans and as people are living longer, it is important the people understand the real cost of retirement and start saving as soon as possible.
Q. How are employees being educated about their 401(k) plans?
A. Historically the focus has been on getting people to contribute or increase contributions to their 401(k). The focus is now shifting to how much income do people need to support their lifestyle during retirement. This question then drives how much they must contribute now to achieve their goal. Without a realistic and meaningful goal, it is hard to expect people to plan, save and meet their retirement income needs.
Q. What should those with 401(k) plans be focusing on?
A. Start by asking questions - your plan is really not as scary as you think. Set a realistic goal for your retirement and start saving. Attend your employer's 401(k) education sessions - they offer a wealth of knowledge and they give you access to retirement professionals. Finally, don't get overwhelm, focus on taking the first step, making a change and reevaluating it on a periodic basis.
Q. How does someone go about calculating the income they need at retirement?
A. The easiest way is an online calculator. They allow you to factor in multiple sources of retirement income including your 401(k) plan, IRAs, savings and social security. These calculators can show you what you need to put away now to achieve your retirement goals.