By: PAULA BURKES, BUSINESS WRITER
Tulsa, OK- Retirement planning trends include automatic enrollment, automatic escalation and Health Savings Accounts
Q: Studies show that more than half of all Americans over age 55 fail to save enough to sustain them through retirement. What can people do now to prepare for retirement?
A: Summit’s team helps employers ensure their employees are prepared by engaging clients with tailored retirement planning solutions and assisting employers who are committed to providing employees with a retirement plan suitable for their needs. Having a plan in place not only helps employees to have a better handle on personal finances, but also helps employers who desire focused, productive employees.
Q: What retirement planning trends are worth watching?
A: Automatic enrollment, automatic escalation and Health Savings Accounts. Among the many others are income in retirement products, financial wellness education, de-accumulation planning for retirement, socially responsible investing and stretch matching employer contributions.
Q: What is the difference between automatic enrollment and automatic escalation?
A: Automatic enrollment, also called negative election, is the practice of automatically enrolling new employees in a retirement account and deducting a certain percentage of the employee’s salary — typically 3 percent — to invest in a retirement plan. However, automatic enrollment doesn’t imply obligatory enrollment. While employees may opt out at any time, most see the importance of this benefit and remain enrolled. With automatic escalation, an employee’s retirement plan contribution is boosted by about 1 percent each year. This escalation commonly continues until the employee contribution reaches 10 percent or 15 percent, a percentage that would help build a substantial retirement account.
Q: What are Health Savings Accounts (HSAs)?
A: Health Savings Accounts allow employees enrolled in high-deductible health plans to use pretax payroll deductions toward health care expenses. Since they are triple tax-advantaged, HSAs are now also being incorporated into retirement plans. Unlike contributions to a flexible spending account, which is a ‘use it or lose it’ account, HSA funds can accumulate for years. Rather than just putting HSA funds into a cash equivalent, they can be invested into the market and withdrawn tax-free as long as they are used for qualified medical expenses.
DISCLOSURE: Securities and advisory services offered through Registered Representatives of Cetera Advisor Networks LLC, member FINRA/SPIC. Cetera is under separate ownership from any other named entity. 1350 S. Boulder Avenue, Suite 300, Tulsa, OK 74119