Most U.S. employees know they should save more for retirement. However with the personal savings rate at negative 1.4 percent (www.bea.gov/newsreleases/national/pi/pinewsrelease.htm), individuals are spending more than they earn, depleting their savings and increasing debt. The task of creating a substantial savings account can be daunting, but according to the preliminary results from the Compensation Data ñ Michigan survey of 220 companies, 99.5 percent of state organizations offer a solution in the form of pension plans.
Michigan organizations offer a variety of savings options. Of those reporting, 63.8 percent of companies offer defined contribution plans only. Additionally, 33.5 percent offer both defined benefit and defined contribution plans to their employees.
When comparing defined contribution plans, 74.4 percent of Michigan organizations offer a 401(k) plan with employer contribution. In addition, 9.3 and 2.3 percent of organizations offer 403(b) and 457 plans with employer contribution. Profit sharing is offered by 17.7 percent, while ESOP plans are provided by 5.1 percent.
In Michigan, full vesting in 401(k), 403(b) and 457 plans happens immediately in 23.8 percent of companies and after five years in 27.1 percent of organizations. These numbers have remained consistent over the last three years. In contrast, the majority of organizations, 45.5 percent, providing other pension plans require five years of service for full vesting.
There are a variety of strategies for saving for retirement. Despite their differences, each consistently gives one piece of advice regarding retirement, which is to start saving now, said Amy Kaminski, manager of marketing programs for Compdata Surveys, the nationís leading compensation and benefits survey data provider. With Social Securityís future uncertain and increased health care costs, employees should take advantage of plans offered by their employers to help ensure their financial security.
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