KnowHow Archive

Plan Sponsor Guide Participant Guide

Measuring Up

Does your retirement plan make it easy for you?

Illustration by Christopher Silas Neal

When you enroll in your workplace retirement savings plan, you generally are told how the plan operates, what the rules are for things like requesting withdrawals or taking out a loan, what your investment fund choices are, and how often you can change them. However, unless you’ve participated in another retirement savings plan, what you may not know is: How does your plan stack up? When it comes to evaluating your retirement plan, is it:

Easy to move in?

Employers aren’t required to let you roll over your account balances from other workplace retirement programs—but, considering how much time and effort it can take to keep up with one account, it sure can help you do a better job of doing so if you can put your accumulated savings in one place. In addittion, if you’ve rolled those balances into an individual retirement account (IRA), you could be paying more than if you simply combined all those accounts in one place.  

Easy to get in?

How soon can you join your retirement savings plan? Does your employer make you wait a month? A quarter? A year? There can be a lot of paperwork involved in getting you set up, so there may be very good reasons for waiting to set up your account. On the other hand, the sooner you can start saving, the better off you are. Even better—some employers will automatically enroll you in the plan.

Easy to save?

We’ve all heard about the benefits of the “free” money that comes to you via the employer match. However, different employers match at different rates, depending on how much you put in—oh, and just because it is free money to you, do not assume it is free for your employer to make those contributions.

Easy to save more?

Many employers now offer the ability for you to schedule automatic increases in your rate of savings—and that can make it easier for you to save more.

Easy to invest appropriately?

Does your retirement plan have enough—and enough of the right kinds of—investment choices? If you are not an investment expert (and most are not), does it have some kind of ­professionally ­managed investment option—a target-date fund or perhaps a managed account?

Easy to get help?

Do you have access to a financial adviser to help you make better investment decisions? Can you get answers to your questions from some form of customer support/call center?

Easy to understand?

Is your participant statement easy to understand? Does it give you a clear sense of what is going on in your account, and how you are progressing toward your retirement goals? Do you know how much you are paying for those retirement plan services?

Of course, “easy” alone isn’t enough, but odds are that the easier your retirement savings plan design makes it for you to do the right things, the more likely you are to do them—and the more likely you are to enjoy a financially secure retirement.

Nevin E. Adams