News flash: The responsibility for saving for retirement is increasingly falling on your shoulders. While the government, and your employer, may have some input, you will never be able to retire comfortably without stepping up to the plate and putting your own savings on overdrive.
Look no further than IBM for additional confirmation.
The multinational giant, often regarded as a bellwether for other American corporations, is changing the way it matches employees’ 401(k) contributions, with the end result being a reduction in what the company itself contributes.
As reported by Kelly Greene of The Wall Street Journal, IBM will switch to paying the entire employer match in one annual lump sum, instead of adding funds every pay period.
What’s more, they’ll time the once-a year match to occur on December 15. If you leave the company before that date, you’ll get nothing for the year.
That doesn’t mean that IBM is stingy with employees. Quite the contrary. In 2011, it paid almost a billion dollars to employees in matching and automatic 401(k) contributions, according to Greene. The company matches 6% to 10% of pay within the 401(k) plan, a very generous contribution compared to other U.S. companies.
But what it does confirm is a trend, which started decades ago, toward moving responsibility for retirement savings from the government, and from employers, to the individual employee.
Another trend? Corporations continue to cut back on employee benefit programs. IBM, like many other employers, did away with its traditional pension in 2008, and moved to a new employee-directed system making it easier to contain costs. Additional companies have trimmed their 401(k) match programs as a result of the 2008 recession.
The Takeaway: If you still have your retirement head in the sand, it’s time to get real. You need to save 10% to 15% of income each year if you want to retire on time and keep your lifestyle on track. We still see far too many people who aren’t getting that message. Need help? Let’s talk in January about what you can do to get caught up!