3 retirement trends may affect you
- Some companies are automatically enrolling employees in 401(k) plans.
- The Obama administration favors mandatory IRA plans for small businesses.
- Some plans will automatically lower the risk in your portfolio as retirement draws near.
3 trends in retirement plansMeeting retirement goals can be tough, especially in a rocky stock market. Instability in the market has caused employers to offer better tools and choices for employees. Automated tools for retirement plans have become a big trend. If you're looking to take some of the stress out of managing your retirement plans, consider these options.
Retirement plans and automatic enrollmentMany companies have recently been offering automatic enrollment for their retirement plans. Pay is reduced by a percentage and contributed to the company 401(k). Different features can be included with automatic enrollment for retirement plans. Some companies offer a feature to increase employee contributions yearly. Automatic enrollment in retirement plans tends to increase participation in the company 401(k).
Retirement plans and automatic IRAs
Though not yet implemented, the Obama administration has proposed mandatory retirement plans for small business owners with 10 or more employees. These automatic IRAs would place a share of every paycheck into their IRA. Employees would have the ability to opt out of the plan. Check out Bankrate's retirement plans calculators to see how much you can save with an IRA.
Target-date funds retirement plansTarget-date funds, or life-cycle funds, automatically shift funds to a more conservative investment style as age increases. In other words, as retirement nears, the stocks and bonds associated with your retirement plans become less risky. Some employers are offering this as an option, but it's wise to research and seek advice on the different categories of target-date funds before opting in.
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