Tag Archives: Meghan Murphy

Retirement Plans A Buyer’s Guide

It takes a lot of planning and preparation for employees to enjoy their retirement years.

While most people want to get to a point where they don’t have to trudge into work each day, if they aren’t financially prepared for that time, it may never come. While the burden might be on employees to make sure they have saved enough for retirement, many believe that employers should share that responsibility.

To help employees make sure they have enough money saved for their golden years, many businesses offer an employer-sponsored retirement plan.

“At its most basic level, it’s a savings vehicle that employers can choose to offer to their employees that allows those employees to save for their retirement on a tax advantage basis,” said Chris Augelli, vice president of product marketing and business development for ADP Retirement Services.

With employee retirement plans, workers set a percentage of their paycheck that they want to invest in the plan.

“It comes right out of the employee’s paycheck each and every time they are paid,” Augelli told Business News Daily. “It automatically comes out pretaxed and automatically gets invested into the plan.”

Linda Wolohan, a spokeswoman for the investment management firm Vanguard, said employee retirement plans can come in a variety of shapes and sizes.

“The type of plan can vary in features, and can vary in terms of whether the employer makes all the contributions to the plan, the employee makes all the contributions to the plan or whether it’s a joint effort,” Wolohan said.

Joint efforts occur when employers offer a matching contribution option. Meghan Murphy, a director at Fidelity Investments, said that in addition to the money the employees invest on their own, many businesses also offer a matching program, in which employers match a certain percentage of the employee’s contribution with their own contribution into the employee’s retirement account.

“A common match is 100 percent on the first 3 percent,” Murphy said. But if you go over that 3 percent, and contribute 5 percent, for example, the employer would just match the 3 percent in that type of match, she said.

With the uncertainty surrounding Social Security, employer-sponsored retirement plans have become much more important in recent years, Augelli said.

“People really need to be taking the onus for their own savings and personal retirement, and there is no better way to do that than to be an employer who is going to offer you one of these plans,” Augelli said.