As National Save for Retirement Week begins, ADP Retirement Services offers retirement tips to employers as well as employees in order to them prepare for their financial futures.
“Americans know they should save for retirement, but the truth is many of us aren’t saving enough,” says Chris Augelli, vice president, product marketing and business development at ADP Retirement Services. “A Pew Research study shows that younger workers, in particular, are more willing to save for retirement if their employers can make the process as painless as possible. By choosing the right kind of plan and maintaining an open dialogue with employees, employers have the opportunity to help reverse the trend of a lack of retirement readiness and motivate employees to strengthen their own retirement security.”
ADP recommends that employers choose plans that are easy to manage. This saves employers’ time on administrative tasks, allowing employers to focus more on their businesses rather than retirement plans. Employers should also align their interests by providing total transparency regarding plan fees. Doing so helps employers know exactly what they’re spending and gives them an unbiased investment approach. ADP also suggests that employers engage and educate employees about plan benefits, which allows them to reach their plans’ full potential. Education materials and workshops are especially helpful in showing employees how much to save.
For employees in their 20s and 30s, they should at least contribute enough to meet plan matching and increase contributions over the years, ADP maintains, and employees in their 40s should consider putting away the maximum allowed. That figure is $17,000 in 2012, and they should also calculate their retirement paycheck to ensure it is being properly invested.
Meanwhile, employees in their 50s should remain focused on their retirement goals and try to catch up that is needed, and employees in their 60s should try out their retirement budgets by living on less and saving the rest. This is when those employees need to decide if they must work longer and delay taking Social Security to maximize their benefits.