Welcome!
(MMRP) was designed to assist 401K, 403b and other employer
plan participants in understanding the power of their plans and helping
them make informed investment decisions within their plans.
On this page you will find information that is useful to all plan participants where the individual company pages will provide details that are specific to those respective employees. MMRP is completely independent and NOT owned, endorsed, controlled, influenced or controlled by any of the companies listed.
THIS MAY BE THE MOST IMPORTANT
FINANCIALDECISION OF YOUR LIFE
It’s not unusual for account values to grow onto millions of dollars and determine the length and quality of your retirement. These plans are tax deferred meaning the money you save goes into your account before it is taxed. Therefore, $1 added to your account does not reduce your paycheck by $1 because you would otherwise pay taxes on including that $1 in your current pay. Depending on your tax bracket and state of residence, these taxes could mean that for that same $1 to be included in your pay may only net you as little as 50 cents.
The ideal strategy is to defer (not pay) taxes on this income now, during your working years,and postpone the tax until after you are retired and can control when and how much tax you pay.
In addition, many plans match all or a portion of the amount you defer. That means for sacrificing 50 cents now you could build an account with $2 in value plus whatever that $2 earns. Here’s a link to a simple calculator that will show you powerful this can be in your situation. www.calculator.net/401k-calculator
HOW MUCH SHOULD YOU SAVE?
This is a difficult question to answer universally as each circumstance is different. Varying factors like longevity, spending habits, lifestyle, ability to handle risk, inflation and, probably most importantly, how you invest all influence the outcome.
A simple rule of thumb is to plan to accumulate 25 times your current annual salary. However, this doesn’t take into consideration the amount of Social Security you will receive or that the average retiree reduces spending by 10% for each 10 years of retirement or several other variables. As with most prudent answers to financial questions, “it depends” may be the best response, although not the satisfying
sound-bite advice most seek.
Another easy way to attack this question is to save 15% of your pay. This too is very dependent on assumptions and can be dangerous. A detailed plan specific to your situation is the best approach. You can find all of your Social Security information here www.ssa.gov and we can provide a report www.getretirementreport.com.
THE CHALLENGE
According to a DALBAR study the stock market has averaged about 10% per year for the past 30 years while the average 401k plan participant has averaged a return of just under 1%. This would suggest that investors are ingenious at doing exactly the wrong thing at the wrong time. Data tracking money flows into and out of mutual fund types at peaks and valleys of market cycles would support that theory as well. What does this mean in real dollars? For the average employee over a 35 year career (contributing 15% of their pay with a company match of 100% on the first 6% increasing salary 3%/yr @1% vs 8%) your retirement account jumps from $826,000 to over $2,900,000. Or, a safe monthly retirement income of $2753 compared to $9667. Use the calculator to adjust the numbers to your situation.
Conversations with thousands of plan participants have revealed an alarming array of responses when asked how they allocated their plan assets: they picked the 3 that had the best performance, asked a coworker what they did, guessed or didn’t, which means the default fund was chosen for them. Unfortunately, few have met with their assigned rep or sought professional help. ERISA law governs all plans and requires that the rep on the plan “offers” to meet with the participants each year, not actually meet with them. These reps receive the same compensation whether they meet with participants or not. Most respondents state they don’t know who their rep is nor have met with them. This leaves a critical void. Trillions of dollars sit underperforming. It’s up to each participant to take control of these important decisions. Your retirement depends on it.
HOW WE CAN HELP
We appreciate that these decisions are like a foreign language. One in which you are not fluent and don’t care to be. You want someone to delegate this task to. If you would like help we can explain all of your options which may extend beyond the choices you are aware of.
