More than 80 percent of U.S. employees participate in retirement savings plans offered through their workplaces, government statistics show. And many of them are now going through the annual fall ritual of open enrollment — in which workers can change plans and alter the amount of money they’re putting away from each paycheck.
To be sure, experts continue to stress the basics of managing retirement benefits: Try to max out the matching dollars offered by your employer, save as much as you can and don’t borrow against the plan.
Still, many plans continue to evolve. Here are some new twists in benefits and advice you might encounter in the benefits enrollment season.
More data, more decisions. What employees want most from retirement benefits is more information to provide context for their financial decisions. A new study released by Philadelphia-based PNC Wealth Management group found that employees saving for retirement felt they needed more help selecting funds and other types of investment options, organizing their portfolios and guidance on how to rebalance their portfolios.
If all of those sound like topics you’d probably discuss with your partner, you are right — and doing so will probably help you stay the course with your retirement plan. The PNC survey found that 90 percent of employees who confide in their partners and review their plans with professional advisors are more confident that they are on track. “To the extent that you have a partnership on the financial commitment, partners will adjust behaviors to facilitate those financial goals,” says Celandra Deane-Bess, chairwoman of PNC’s national practice group on retirement and a wealth planner.
That’s why employers often send information home, where you are more likely to review it with your partner, and why you will probably be encountering a richer menu of advice and communications about your retirement options, Deane-Bess says, adding: “There are resources right there in your benefits office to take advantage of.”
Also, don’t second-guess the financial advisors that your employer brings in for informational sessions. “Even if they bring in someone from the outside, the employer is invested in bringing in objective experts,” Deane-Bess says. Outside advisors are not supposed to use the captive audience of you and your co-workers to flog their own services, but are paid to deliver answers on the spot.
One good question to ask: What are the tax implications of various savings and retirement options? At the very least, you can get some advice that can focus your subsequent conversation with your accountant or tax consultant, Deane-Bess says.
Also consider asking about the implications of minimizing some types of savings, such as prepaid legal or health benefits, and saving the difference in your retirement account, she suggests.
Employers often introduce new vendors and benefits partners in the autumn enrollment season, so don’t assume that all plans are continuing as they have been, without interruption. “It’s worth evaluating how much you’re spending,” Deane-Bess says.
Go social. When you do dig into the specifics of the retirement options open to you through your employer’s plan, you will likely will find additional ” responsible investing” funds in the mix. Lynne Ford, executive vice president of Maryland-based Calvert Distributors, who oversees the socially conscious firm’s institutional and individual sales, says employer plans are starting to get on the bandwagon.
Calvert research indicates that 82 percent of employees would opt for investments that make the world a better place while making money. “People are about aligning their investment options with their values,” Ford says.
Part of this awareness stems from increased news about workplace conditions throughout the world, and workplace inequities in the U.S., she says. Suddenly, what happens to other workers feels close at hand — and responsible investing funds let you do something about it in the process of achieving your retirement goals.
While Calvert found that 78 percent of plan participants wished they knew more about the companies they were investing in, this point of view was especially compelling for millennials.
And if you don’t see responsible investing options in your company’s benefits package, or aren’t sure what you are looking for, know that asking can be the change that human resources needs. “Participants sometimes don’t realize that they do have a voice,” Ford says. “If they don’t see what’s important to them, they can have a dialogue with their employers about what they’d like to see.”
Tone up your retirement health benefits. Finally, be on the lookout for more in-depth information about health care costs in retirement and what you can do about them in advance.
Ron Mastrogiovanni, president of HealthView Services, a Danvers, Massachusetts-based firm that helps retirement advisors diagnose the likely impact of clients’ retirement health care costs, says you can rejigger some costs in advance to enter retirement with a boost.
One tactic is to scrutinize your health care plan. If you’re relatively healthy and don’t anticipate major expenses, consider going for a high-deductible plan in the several years before you retire, he says. Then, shift the money you save into a health care savings account, especially if your employer matches it. Use that cache to spend down on approved medical expenses such as paying for Medicare Part B premiums.
And take time to examine the tax and income implications of shifting from your employer plan to Medicare, Mastrogiovanni says. It’s not a seamless shift from employer-paid benefits to Medicare. “The more you earn, the more you pay for Medicare Part B, which is doctors, tests and the emergency room. That’s means-tested,” Mastrogiovanni says. So is Medicare Part D, which covers prescription drugs.
Check with your financial advisor to see if you can roll accumulated savings in products such as a Roth 401(k) or a qualified annuity or health savings account to help cover retirement expenses. Finally, analyze your retirement cash flow, assuming a 6 percent annual health care inflation rate, and see what you need to do to ensure that at least part of your portfolio is likely to keep pace, Mastrogiovanni says.
More from U.S. News
8 Stocks to Buy for ‘Star Wars’ Fans
Battle For Supremacy: Robo-Advisors Versus Financial Advisors
9 Ways to Invest on a Small Budget
3 Tips to Guide Investors Through 401(k) Enrollment originally appeared on usnews.com
