401k Retirement Investments Changing in 2011
With unemployment rates finally falling, an economy slowly rising and more seniors looking to supplement their retirement income many companies have decided to alter their 401k retirement investment and senior social security plans.
In fact, an Aon Hewitt survey of 210 companies found that nearly 70% of firms plan to put their 401k plans into a serious round of reviews. What does this mean for you? How are you senior social security benefits going to change? Should you move your retirement bonds?
Below is a list of the most likely changes most companies will be making to their retirement investment plans in 2011:
Automatic 401k features
Ninety-four percent of retirement packages come in the form of a 401 retirement investment plan, or a similar type of account. Over half the companies surveyed said they plan on implanting a 401k plan to new employees automatically, as well as automatically increasing the contributions to those accounts. These new automatic changes will most likely only effect new employees.
Investment Options
Companies want to offer more investment options to their employees to keep their retirement investments in their job-issued investments. Lower cost funds and managed accounts are two of the most popular changes-to-be-made for company’s investment options.
Roth 401k
About a third of employers offer a Roth 401k investment option. This number has increased by 29% from 2009 and in 2011 looks to increase by another 38%.
Target-date funds
A target-date fund is a type of retirement mutual fund that automatically resets stocks for retirement, retirement bonds, etc. based around a certain date in the future – usually retirement. Almost all companies use them as options in their 401k plans, and those that don’t are most likely going to implement them in 2011. Keep in mind that target-date funds differ in their conservatism based on how the company uses them; sometimes they will grow more conservative in the year of the fund’s name whereas others grow more conservative after time of retirement.
Annuities
Almost 20% of companies currently have some sort of retirement income stream option for employees, but adding more annuities to 401k plans is in the idea pot of 2011 changes for about 13% of companies surveyed.
401k Matches
Matching an individual’s 401k has gained significantly in popularity but has not seen a huge increased in usage until this year. Due to the recent recession most companies had to decrease the amount they matched or take it away altogether. However, with the economy slowly bouncing back, 55% percent of the companies who hindered their matches are reinstituting them or increasing the amount being matched.
Pension freezes
This is one of the forecasted 2011 changes that won’t change, but in itself is something to be noted. Pensions have steadily dropped throughout the years and will continue to do so in 2011. Some companies mentioned freezing accruals for all employees and others mentioned closing pension plans to new employees entirely.
