Unfortunately for many workers, no amount of education will be able to clear the gathering clouds in their sight lines. “It’s beginning to dawn on an awful lot of people that they don’t have enough retirement income,” says William Slater, vice president for retirement services at MetLife. “The savings rate, which has historically never been where it should be in this country, is going to directly impact those people when they hit retirement.”
“Employees are absolutely not contributing enough to their 401(k) plans,” adds Patricia Pou, a principal at Mercer HR Consulting. “Even employees who can afford it don’t realize that they should be saving throughout their career, not at the end when retirement is in sight.”
John P. Mello Jr. is a freelance writer based in Woonsocket, Rhode Island.
|Mix and Match
How companies contribute to 401(k) plans.
|Fixed match (e.g., 50 cents per $1 up to 6% of pay)||72%||72%||73%|
|Graded match (e.g., $1 per $1 on first 3%, 50 cents per $1 on next 3%)||13%||17%||15%|
|Discretionary profit-sharing nonmatching contribution||15%||16%||18%|
|Discretionary profit-sharing matching contribution||5%||10%||7%|
|Match based on length of employee’s service||5%||5%||5%|
|Match based on company performance||10%||5%||5%|
|Other contributions (e.g., age-based match)||6%||6%||4%|
|No employer contribution||3%||2%||4%|
|Source: Hewitt Associates 2003 survey of 489 large employers|