Many employees are now “flexing” into retirement via part-time work, down-sized responsibilities or passion-driven projects. Others hope for a full-on “stop” date. Though dreams differ, all workers need support making informed decisions. Leadership at the Employee Benefits Security Administration (EBSA) provides resources.
Informed Decision Making
Recognizing that successful retirement requires informed decisions on the path leading up to it, Assistant Secretary of the DOL’s EBSA division, Lisa M. Gomez encourages wise use of the planning tools and resources offered by the government:
Transitioning from your work life into retirement takes planning to make sure you have enough savings to cover a hopefully long retirement. For a financially secure retirement, it’s important to make the most of your job-based retirement plan and make informed decisions about Social Security and Medicare. Considering these issues may seem overwhelming. Our Employee Benefits Security Administration has resources to help you plan for retirement with information and tools to prepare to make timely decisions and determine if you are on track for a financially secure retirement. If you’re about 10-15 years from the date you want to retire, our publication “Taking the Mystery out of Retirement Planning” can help you plan….It includes worksheets that provide a simple approach to figure out approximately how much you need to save…. The interactive worksheets also help you track your progress in saving.
Another helpful resource, the Retirement Toolkit, combines intel from three federal agencies, assisting workers to plot out how a “job-based retirement plan, Social Security benefits and Medicare,” can work together for a secure and successful retirement. Lisa M. Gomez also recognizes the important role solid financial advice can play for employees, noting:
Under our recently issued Retirement Security Rule, if you seek help from a financial professional in getting recommendations how to invest and manage your retirement savings, you can now rest easy knowing that, under this new rule, that financial professional is required to act in your best interests and provide you with sound advice, not mislead you and not overcharge…..We recognize the enormous contributions that retiring workers have made to this country. We are committed to ensuring that every American can transition from years of hard work into the next chapter of retirement with the dignity and financial security they deserve, and the retirement savings they’ve earned along the way.
Timeline for Retirement Preparation
Lack of clear information about how and when to build the footbridge to retirement makes it overwhelming for many employees to even start planning. This
age-based timeline from the Department of Labor (DOL) is likely to be a very helpful jumpstart for retirement plan participants:
- Age 50 is when workers can begin to make catch-up contributions to 401(k) and other retirement accounts.
- Age 59 ½ there are no longer tax penalties on early withdrawals from employer-provided retirement savings plans such as 401(k) plans and other individual retirement accounts.
- Age 62 is the earliest age to begin collecting Social Security retirement benefits; however, claiming before the full retirement age results in reduced monthly benefits.
- Age 65 workers can enroll in Medicare and Medicare Part D.
- Age 66-67 is the age to start receiving Social Security full benefits, depending on birth year.
- Age 67-70 claim Social Security Delayed Retirement Credits, which increase monthly benefits for each month claiming is delayed between the full retirement age and age 70; and
- Age 73 start taking required minimum withdrawals from most retirement accounts; otherwise face penalties.
Support for Plan Sponsors
Plan sponsors are wise to take their work helping employees prepare for retirement seriously: “Retirement plan fiduciaries are making decisions that affect plan participants’ retirement savings, and for many participants, it is the largest sum of money they will ever see….” Indeed, it’s no wonder that as fiduciaries, plan sponsors are held to the highest standards known to law. The DOL continues to run a robust civil investigation program, and Groom Law Group provides this chart to give plan fiduciaries a further understanding of the penalties and fees associated with ERISA violations.
Armed with Fiduciary Liability coverage from Colonial Surety, for a few dollars a day, plan sponsors receive defense costs and penalty limits up to $1,000,000, if faced with alleged or actual breaches of duty in connection with the employee retirement plan. Cyber liability coverage is included at no extra cost, providing additional protection–for the plan and your company–against regulatory actions related to data and privacy, as well as expert response services.
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