At law firm Akin Gump Strauss Hauer & Feld LLP, the 401(k) plan’s participants have varying salaries, goals and retirement time horizons. The Washington, D.C.-based firm includes partners (19%), other attorneys (35%) and administrative staff (46%).
So when it comes to the amount of retirement savings accumulated, “our people are all over the spectrum,” says Jessica Chicorelli, Akin Gump’s director of retirement benefits. “Some of them are off the charts, and some have a long way to go. The 401(k) is only a small piece for some people, and, for others, it’s the only piece. So we really focus on personalized education.”
The $413.8 million plan has 2,337 participants and 97% participation. New hires are automatically enrolled at 3% and see their contributions boosted automatically by 1% a year, up to 10% of pay. Participant deferrals average 7%, and the company matches 10% of their contributions up to a $1,750 maximum, which increases as the 402(g) limit increases. The average participant income replacement ratio stands at 57%.
For some Akin Gump employees, saving for retirement began when they were automatically enrolled. “There are the attorneys who are fresh out of law school, making money for the first time,” Chicorelli says. “We are really trying to focus on that group, to say, ‘Start smart. Don’t spend all your money.’” For instance, last year, the plan sent targeted emails to participants who deferred less than 10%.
Since 2008, Akin Gump participants have had access to an online retirement-calculator tool offered by the plan’s recordkeeper, ING; the tool forecasts the percentage of income individuals are on track to replace. Last year, participants also received personalized savings evaluations with recommendations to improve their outlook. Seventeen percent of Akin Gump participants have utilized the calculator tool, Chicorelli says.
This year, the firm arranged for ING to do voluntary one-on-one meetings with participants about their retirement-income outlook. The meetings “will really give people a sense of what they need and what they have,” Chicorelli says.
Akin Gump employees on the higher-income end often have retirement savings outside the 401(k), Chicorelli says, and partners have a cash-balance plan. “If you look at income replacement for a partner, his 401(k) balance is not going to replace all of his income in retirement,” she says.
In 2011, the plan added a Roth feature for employees who want to save after-tax, too. This year, participants will start using a new enhancement to the ING tools that lets them input all their financial information, including outside assets, and create and track personal savings goals such as the income replacement they want to achieve.
Ultimately, Akin Gump hopes to see all participants reach a 75% to 80% income-replacement goal. “I think it’s doable,” Chicorelli says. “It’s all about educating them and getting them on the right path.”
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