Your employees have one chance to prepare for retirement and it is essential to provide them the tools necessary for success. At the end of the day, (or career in this case) the most important question is “how much money do I have for retirement?” There are three ingredients that impact the answer to this question. They are the length of “time” to prepare for retirement. The amount of “contributions” made each month to achieve retirement goals, and the “performance” that is achieved on those savings. “Time” and “contributions” are within each participant’s control. “Performance” is determined by the investments available within the 401(k) and the skill in using those investments to achieve the appropriate risk adjusted performance.
WealthHarbor offers plan sponsors a full compliment of investment education, and/or advisory tools to select from. Investment options include participant-directed selections in addition to a managed portfolio for those participants that are uncomfortable with managing their investments or simply want professional assistance. What matters most in either approach is how well the participant’s account performs.
How important is performance? The difference in a single percentage point can be amazing. Let’s assume an employee contributes $500 a month for 30 years. If that employee earns 8%, he/she will accumulate $745,179 for retirement. A return of 9% will increase his/her retirement nest egg to $915,371, an increase of 22.8%.
In this case, retirement success can be impacted by two factors, plan expenses and investment return. Reducing expenses delivers more money to participants so managing plan costs can directly add to retirement savings. Increasing return is a function of identifying excellent investments in each asset class and using investment management techniques that can enhance long-term performance. At WealthHarbor we work to increase long-term performance by providing your employees with solid investment guidance and providing your plan with excellent investment selections.