Retirement Security

How To Make The Most Of A Defined Employer Retirement Contribution Plan

• Study your employee handbook and talk to your benefits administrator to see what plan is offered and what its rules are. Read the summary plan description for specifics. Plans must follow federal law, but they can still vary widely in contribution limitations, investment options, employer matches, and other features.

• Join as soon as you become eligible.

• Put in the maximum amount allowed.

• If you can’t afford the maximum, try to contribute enough to maximize any employer matching funds. This is free money! It’s like getting a raise.

• Study carefully the menu of investment choices. Some plans offer only a few choices, others may offer hundreds. The more you know about the choices, investing, and your investment goals, the more likely you will choose wisely.

• Many companies match employee contributions with stock instead of cash. Financial experts often recommend that you don’t let your account get overloaded with company stock, particularly if the account makes up most of your retirement nest egg. Too much of a single stock increases risk.

• Plan fees and expenses reduce the amount of retirement benefits you ultimately receive from plans where you direct the investments. It’s in your interest to learn as much as you can about your plan’s dministrative fees, investment fees, and service fees. Read the plan documents carefully. For more information on fees, call EBSA’s toll-free line at
1-866-444-EBSA (3272) and request the booklet A Look at 401(k) Plan Fees.

Women face challenges that often make it more difficult for them than men to adequately save for retirement. In light of these challenges, women need to pay special attention to making the most of their money.

• Women tend to earn less than men and work fewer years.

• Women stay at jobs for a shorter period of time, work part time more often, and interrupt their careers to raise children. Consequently, they are less likely to qualify for company-sponsored retirement plans or to receive the full benefits of those plans.

• On average, women live 5 years longer than men, and thus need to build a larger retirement nest egg for themselves.

• Some studies indicate women tend to invest less aggressively than men.

• Women tend to lose more income than men following a divorce.

• Women age 65 or older are almost twice as likely as men the same age to receive income below the poverty level.

For more information, call the Employee Benefits Security Administration at 1-866-444-EBSA (3272) and ask for the booklets Women and Retirement Savings, Taking the Mystery Out of Retirement Planning, and QDROs: The Division of Retirement Benefits through Qualified Domestic Relations Orders (for example, divorce orders). Also call the Social Security Administration at (800) 772-1213 for their booklet What Every Woman Should Know, or visit the agency’s Web site at Social Security