Retirement Plan News

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A common concern for many plan participants is how they should invest their retirement accounts. If you are one, please feel free to contact us. We will gladly help you – and “It’s Free.”

For those of you trying to do this on your own, let’s review what’s happened to investments this year (so far).

Stable Value Investing: These investments are valued at $1.00 and earnings are paid at some interest rate. The interest received moves up and down depending upon the economy (but is ultimately determined by actions of the Federal Reserve). Interest rates have been at a historical low since 2008. The current average 6-month C.D. yield is about .3%. There is nowhere to go but up – the question remains as to when.

Stock Market Investing: It goes up and it goes down in no predictable manner. In the preceding 14 months ending in April 2010, the stock market (S&P 500 Index) went up 80% (keep in mind the 2008 losses). From April 23 to July 2, it lost 16%. From July until now, it’s up 19%. If you’re not already invested in the stock market, this review might make you want to “jump right in.” If so, remember that at any unpredictable time, it could turn negative. If you do not have the tolerance to stay with it when this happens, you should not go there.

If you are a frequent reader of this update, you know that studies and surveys of retirement savings are always happening. In the more recent studies we find the following:

  • The average participant with a 401(k) plan as their only savings will not be able to retire until age 73.
  • 58% of workers age 25-34 are saving for retirement compared with 69% of all workers.
  • 64% of older Americans receive at least ½ of their income from Social Security.
  • Over 47% of baby boomers (age 56-62) are at risk of retiring without funds to pay for basic retirement expense s and uninsured healthcare costs.

If you do not wish to be in these bleak statistics, consider the following:

Across all age groups, those who contribute the greatest percentage of income, have the best chance of a financially secure retirement. The decision of how much to contribute is much more important than which investments are used.

What is YTD? It means Year-to-Date, which is the return of a particular investment option from January 1 to a certain ending date (in this update, January 1, 2010 to November 30, 2010).

It’s been said that stock investing has resulted in a “lost decade” because the stock market is no higher than 10 years ago. But in a study of those who continued to contribute 8% for the 10 years, their accounts were up 130%. So, all is not lost for those who remain committed to saving through all the stock market’s ups and down.

2011 401(k) contribution limits: $16,500 and $22,000 if age 50 or older. To determine your contribution election, decide what you would like to contribute and divide by your expected 2011 compensation. For example:

$ 5,000 - 401(k) contribution = This equals a 14% contribution
$35,000 - estimated salary

One of the biggest financial mistakes to be made is to elect not to participant in your Employer 401(k) plan.

Final Thought

About 53 million people are receiving social security. If Congress decides to provide a $250 additional benefit to offset the “loss” of 2011 cost-of-living adjustment, it would cost $13,250,000,000 (over $13 billion). Can we afford this?

Helping Out: Our job is to make sure you understand how to get the most out of your plan. We can help with your investment choices and answer your questions on how the plan works. Give us a call.

  • Remember - investment changes or current account values can be obtained through our website at www.gsb.com. If you would prefer to speak to an Employee Benefits Representative, please call 1-888-729-8787 during business hours. Also remember, if you want to make an investment change, there are TWO types of monies to change: future contributions and existing balances.

    The comments above do not represent a recommendation to buy or sell any investment.  Such decisions should only be made in the context of each investor's total circumstances and goals, and past performance is never a guarantee or forecast of future result  plus investments are not government-insured nor are they guaranteed in any way by Glenview State Bank.