Offering a 401(k) retirement plan for your practice to participate in is a great benefit. Getting your employees to appreciate and take advantage of this benefit is often a challenge. However, a retirement plan with engaged, informed and participating employees is a successful retirement plan.
Two of the factors most often mentioned when measuring a successful 401(k) plan are high participation rate (80%-90% of eligible employees participating) and high contribution rates. With uncertainty surrounding Social Security, rising healthcare costs and increased life expectancy, the ability to achieve a fulfilling retirement is heavily dependent on the amount of funding that a participant can accrue in his/her retirement plan. It is vital for employees to take advantage of the opportunity you have provided them by participating in the 401(k) plan.
Most plan providers offer tools and calculators available on a website to assist participants in determining how much they need to save in order to meet their retirement goals. In addition, encouraging employees to visit the site to monitor their accounts and take advantage of the educational tools may get them more engaged in managing their own retirement savings and making your plan more successful.
Benefits of Increased Savings
There are generally two high-level strategies to follow to generate a retirement plan account balance that meets retirement goals: start early and increase savings over time. All new employees should be encouraged to start as soon as they are eligible, at a savings rate that they are comfortable with, which should be re-evaluated annually, if not more frequently, to verify that they are on course to meet their retirement savings goals. If they are not on track, they should consider increasing their contribution rates.
The hypothetical chart below assumes 6% rate of return and shows the potential an employee could generate by increasing his/her 401(k) contribution by a small amount each week. All participants should be strongly encouraged to invest in line with their risk tolerance levels, since investments are subject to market risk, will fluctuate, or may lose value.
Encouraging your employees to start early and increase their savings rates over time can help your plan be successful for both them and you.
Regardless of when you plan to retire, most practice owners understand that sponsoring a retirement savings plan can help attract and retain qualified employees. The ultimate success of a plan depends in part on having engaged, informed, and participating employees.
Whether you already have a plan or are planning to start one soon, you should know the AXA Association Business has been the AIATrust preferred provider since 1991. The program provides value-added services specifically designed for you, and simplifies the process of establishing a retirement plan with personalized service, full plan administration, and a diverse range of investment options.
If you would like information, please contact a Retirement Program Specialist at 800-523-1125, ext. 2022 or visit online www.axa2plan.com. All information and consultations are free of charge and are made available to AIA members at no obligation.
The Members Retirement Program (contract form #6059) is funded by a group variable annuity contract issued and distributed by AXA Equitable Life Insurance Company, NY, NY. AXA Equitable does not provide tax or legal advice and is not affiliated with the AIA.
GE 86001 (6/13) (Exp. 6/15)