401k Principal Financial Group

Pros give advice on wrestling retirement woes

There are few issues that boggle the brain quite like preparing for retirement.

Whether you're 20, 30, 50 or 70 years old, it's an issue that UCF professor Paul Gregg and financial expert Steve Orr say should always be in the back of your mind, regardless of how confusing it can get.

But to alleviate that confusion, there are some simple ways to prepare yourself for that big hike over the hill so that when you get there, it's not a downhill slide to rock bottom.

First and foremost, if you have the opportunity to invest in a 401k, or work with a company that offers some sort of matching program, do so, Gregg said. You should save enough to receive the full match that is offered by your employer.

"For example, if the employer will match up to half of the employee's savings up to 5 percent, than the employee should save 5 percent in order to get the full 2.5 percent match," Gregg said. "Most employees do not save enough for retirement, and should try to save about 15 percent of their annual salary each year in order to have sufficient savings at retirement."

Additionally, Orr said that when it comes to putting money aside, the task may be easier than it seems. He said that by cutting out little "impulse" buys, we can save a tremendous amount in the long run.

"It's the little things," said Orr, president and owner of the Orr Financial Group and author of Noisemakers, a book on sound investments.

"It's the dollar-here-two-dollars-there things that we pick up every day that start to add up," he said. "The insidious thing is that it still doesn't add up to so much that we think it could make a difference in our futures, because we only see those expenses in terms of the dollars we spend, but not the dollars - plus the interest - we could be earning on them."

For instance, the daily specialty coffee from the local coffee stand costs about $3.95, depending on where you live.

If you got one every day of the week for about 40 weeks out of the year, for the typical 35-year employment span between ages 25 and 60, it would cost you about $27,650, he said.

"If you were to put the total of all these items into your 401(k) or Roth IRA or any other type of retirement investment vehicle every year for 35 years and you earned a minimum of 3 percent interest every year on that money, you'd have an extra $246,560 in your retirement account at the end of that 35 years," Orr said.

Moreover, Orr said that between 1970 and 2006, the annual return rate of the S&P 500 was 11.5 percent. At that interest rate, at the end of 35 years by Orr's calculations, workers would have an additional $1,792,373 in their retirement accounts.

403(b) - Principal Financial Group

403(b) Plan Sponsors Rising to the Challenge

Plan sponsors adapting to new regulations, according to new survey from Profit Sharing/401k Council of America

May 23, 2011 (Des Moines, IA) - In the wake of sweeping regulatory changes from the Department of Labor (DOL), 403(b) plan sponsors are in the final stages of compliance—while also adapting to participant needs and coping with volatile investment markets. These insights and more are revealed in the latest 403(b) plan sponsor survey from the Profit Sharing/401k Council of America (PSCA).

The survey, which was sponsored by the Principal Financial Group .

The survey shows increases in:

“This year’s survey proves that 403(b) plan sponsors are still working hard to comply with the new regulations,” says David Wray, president, PSCA. “Although the rate of change has slowed since our 2009 survey, there are still significant adjustments underway as plan sponsors respond to the needs of their participants and their plans.”

Full survey results are may be purchased from PSCA at www.psca.org .

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