4 answers

Is retirement going to be available for millennials through 401k?

Updated Chicago, Illinois

I've heard a lot rumors about companies getting rid of 401k. Therefore forcing employees to do retirement plans on there own but, it will be be hard to do if a person doesn't make a lot of money.
#retirement #financial-planning #millennials

4 answers

Roger’s Answer

Updated Walnut Creek, California
Hi Charles: I have not heard of the rumor that companies are getting rid of 401k's. In fact, smart companies -- a company YOU would want to work for -- gladly offer and encourage their employees to participate in 401k's. And, these same companies often match your contribution by 6%. So, if you are making $50,000 a year, the company is giving you $3000 on top of your salary as a participant in a 401k. Good companies really want you to participate and invest in 401k's. These wonderful long-term wealth creating financial benefits are not going away.
Updated
Keep in mind the biggest benefit to a 401K is the longevity. Start a 401K as soon as you are able and invest at least the amount that your company will match. 401Ks can often earn a 10% return on investment. For example, when your 401K reaches $100,000 you will $10,000 if you receive a 10% ROI. There are plenty of 401K calculators online to reference.

Bobby’s Answer

Updated Abu Dhabi, United Arab Emirates

Hey Charles B. Most companies are establishing 401k, 403b and similar plans. 401k plans and similar plans are called Defined Contribution Plans. Defined Contribution Plans are what most employers are transitioning too, they are a lower cost to the company than Defined Benefit plans, or pensions. With Defined Contribution plans the employees designate a portion of their income toward their retirement. Some experts suggest 10%-15% or to at least match the maximum employer contribution. The employer matches up to a certain percentage, typically I've seen 3%-6% from the employer. Defined Benefit plans can be costly and are being phased out by companies in an effort to establish a Defined Contribution Plan.

Sergio G’s Answer

Updated Dallas, Texas

401(k) plans are a type of retirement plan that is set up by employers and allows employees to elect to make contributions. Some employers also make contributions on behalf of employees. You must decide how your retirement plan is invested. The rate of return is not guaranteed and your account may loose value, but still a retirement plan is your best option to save for retirement and you should make contributions as early as possible.

Alan’s Answer

Updated

I am not familiar with the idea of companies discontinuing these types of plans. And I would suggest you get started deferring into this type of plan as soon as possible once you start working. Find out about the plan your employer might offer and contribute as soon as possible (At least as much as the company matched, if not more - say 10% of pay). If you want to have sizable nest egg when you reach retirement age, you want to start saving as soon as possible. Experts suggest you save between 10%-15% of pay for your entire career in order to save enough for you to retire with an amount that could approach 10 times your salary.