The Partners Circle

The mission of the Partners is to empower all of us to go directly to each other with our expertise. FiduciaryFirst is considered an industry leader and our knowledge and informative blogs can help you gain an understanding about key topics within the industry.

What Age Should You Retire?

What Age Should You Retire?
When we think retirement age, 65 is often the first number that comes to mind. But that doesn’t mean it should be your final answer. While it’s often a starting point for consideration, there are several factors that could make another age a better choice for you. Here are eight considerations to keep in mind when making this very important decision. 1. Your plans.If you want to start a business, run a charity or create a foundation — those could take a while to get off the ground. Make sure you allow enough time for your dreams to come to fruition. 2. Your money.While you may want to retire by 60, you might not be able to afford to given your current savings. In that case, delaying retirement and working a few extra years may be well worth the wait. 3. Your health.Do you have any chronic or progressive health...
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The 1% Change That Can Really Make a Difference

The 1% Change That Can Really Make a Difference
Sometimes small moves can yield big results. If you want to plan for a better, more secure retirement, start by increasing your 401(k) contribution by just 1%. You might be thinking that 1% can’t possibly make that much of a difference — but you’d be wrong.Here’s what Fidelity Investments found when they ran the numbers on the effect of a 1% retirement account increase for employees at different ages and salary levels. Example #1: Suzi, age 35, earning $60,000 per year.If she put less than $12 more into her retirement account each week, Suzi could accrue over $85,000 more by retirement.* What could that money buy her?According to cars.com the average new car payment is now $523 per month. With her additional savings, Suzi could ride in style for 162 months during retirement — that’s more than 13 years of new car smell! Example #2: Andrew, age 45, earning $70,000...
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TDF Investors Hang Tough in Down Markets

TDF Investors Hang Tough in Down Markets
Target date funds (TDFs) have grown increasingly popular since their inception over two decades ago. In fact, 72% of retirement plans have TDFs as their default option and more than 40% of retirement plan account holders use a TDF. With so many employees invested in Target date funds, it’s important to understand how they tend to behave in markets under pressure and their likelihood to adhere to a long-term investment strategy. The good news for plan sponsors with TDFs under management is that those invested in them tend to stay put — even during volatile and declining markets. A recent study by Fidelity examined the behavior of their TDF investors during two particularly volatile periods of the stock market: the 2007-2009 bear market and the 2015 downturn. They found that TDF investors tended to maintain consistent savings behavior and retain their market exposures during both of these declines. Interestingly, even...
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Four Ways to Increase Employee Retirement Contribution Participation

Four Ways to Increase Employee Retirement Contribution Participation
As a retirement plan sponsor, can you encourage your employees to save and save more? A significant amount of research says that yes, you can improve both employee participation and their saving rates. Here are four ways you can help your employees start building a confident retirement: Boost employee participation with automatic enrollment. Choosing to automatically enroll all new employees in your retirement plan can dramatically improve your participation rates. According to the Center for Retirement Research (CRR) at Boston College, in one study of automatic enrollment, participation increased by 50 percent, with the largest gains among younger and lower-paid employees.1 While auto-enrolled employees are allowed to opt out of the retirement plan, most generally stay enrolled. Set the initial default contribution rate higher. Many companies who use auto-enrollment set their default contribution rate relatively low at three percent, according to the CRR, which is lower than the typical employer match rate of six...
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IRS Tips for Plan Sponsors

IRS Tips for Plan Sponsors
As an employer, you’re ultimately responsible for keeping your company’s 401(k) plan in compliance at all times. Your plan document should be reviewed on an annual basis and administered accordingly. The IRS offers useful tips for plan sponsors to help in those efforts. Here are some highlights on their guidance. Understand and verify your adoption agreement options.For pre-approved plans, you may have an adoption agreement that supplements the basic plan document and lists features that may be selected. It’s important to understand this document and specifically what it says about plan eligibility, types and limits of contributions, how contributions are divided among plan participants, vesting and paying benefits. Educate yourself about your service agreement. As a plan sponsor, it’s important to understand what your service agreement does and does not cover. For administrative tasks, it’s imperative to know who will perform these and to make sure that person has the...
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Tax-Advantaged HSAs Can Lead to a Healthier Nest Egg

Recent changes have strengthened a savings tool that was already gaining popularity with retirement plan consultants. Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) were originally created by Congress to help consumers save money tax free to pay for healthcare. In 2018, contribution limits were raised, increasing the utility of these little-known but powerful accounts.   Sounds Similar — But Very Different   While HSAs and FSAs share some similarities, they can serve very different purposes. Retirement plan consultants can help participants boost their retirement savings by showing them an often overlooked benefit to one of these types of accounts. FSAs are employer sponsored and used to save for medical expenses that employees anticipate having during the year. HSAs are individual accounts that can be used for any purpose after age 65. Both allow money to be contributed pre-tax, and distributions are tax-free when used for qualified healthcare expenses....
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Overcoming Myopic Investment Decision-Making: Where Advisor and Analyst Meet

Even when presented with timely and accurate financial information by fiduciary advisors, employees don’t always make the best decisions for themselves when it comes to saving for retirement. When advisors exclusively focus on financial education and fail to address underlying issues of behavioral economics, there’s a greater chance that poorer financial decision-making may occur. Helping employees overcome the cognitive biases that can lead to bad investment decisions increases their chance for success in becoming retirement ready. Short-Term Thinking Myopia, in the realm of financial planning, refers to the tendency to make shortsighted financial decisions at the expense of longer term gains. Studies show that when offered the choice of $100 now or $120 in a month, more people choose the immediate reward. However, if the offer changes to $100 in 12 months or $120 in 13 months, they more often elect the higher payout. One potential explanation for this inconsistency...
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Don’t Overlook the 401(k) Plan in a Merger

Don’t Overlook the 401(k) Plan in a Merger
A business merger can be stressful for all involved. In addition to educating and reassuring employees and clients, leaders must exercise proper fiduciary risk management. During the planning phase, it’s important to consider 401(k) plans, which fall under the buyer’s responsibility once the acquisition is complete. For plan sponsors at the acquiring company, it’s crucial to thoroughly investigate the seller’s 401(k) plan to determine whether you want it terminated or merged into your own. Here are a few tips for how to handle a 401(k) during a business merger. When to Adopt During an acquisition, many businesses choose to operate two separate 401(k) plans to ease employees into the new business. Others choose to merge plans, which can create complications, including that any liabilities may fall under the responsibility of the acquiring company’s leadership. If a substantial portion of the seller’s employees remain, this might be the easiest way to...
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