Open Enrollment: Retirement Benefit Selections

 Employees of many US companies have a window each year to review their benefit elections. While this is often tied to health care decisions, retirement elections can also be reviewed at this time. A study by retirement provider Diversified published in AdvisorOne in August indicated that 34% of people “guessed or made up” their estimated needs for retirement.


  1. Take charge of your decisions: Studies indicate that focusing on investment decisions can distract 401(k) and 403(b) plan participants from the most critical decision to measure their future savings success: their deferral election. As a recent white paper from Putnam titled “Missing the Forest for the Trees” indicated, “eligible employees…(who) increase their deferrals into Defined Contribution plans is a good way to help boost their wealth accumulation potential.” Remember these things:

    ✔ Saving early and often is typically a recipe for retirement success.

    ✔ Many employers match your retirement savings with a contribution of their own. Know your employer match policies and make sure that you are not leaving money on the table.

    ✔ Are you eligible for catch-up savings? In 2013, 401k participants that reach age 50 can contribute $5,500 or more in addition to regular contribution limits.
  2. Plan to increase your savings: If you don’t feel comfortable boosting your savings rate today, pre-commit to a boost tomorrow. Shlomo Benartzi shows in his book Save More Tomorrow that those who plan to increase their savings at a pre-determined point, such as when they get a raise, will have more success overcoming the inertia of the status quo. 
  3. Review newer options: Employers are beginning to make changes from defined benefit pension plans to defined contribution plans or offer Roth 401(k)’s instead of traditional 401(k)’s. Make sure that you know your options if things are changing and consider what is best for you both short-term (with implications to your household pocketbook) and long-term (with impact on your ability to retire comfortably).
  4. Evaluate your investment mix: Don’t rely merely on recent returns from the investment options in your plan to make your investing decisions. Financial Engines and Aon Hewitt released a study in 2011 which indicated that employees who used professional advice realized returns that were about 3 percent higher than those who invested on their own. Many plans now offer recommended allocations by retirement dates or risk categories which may help.

As you look to making retirement planning decisions, keep in mind that it is never too early to seriously think about retirement. Professionals like financial planners can help you along the path. If you have questions or would like professional advice, don’t hesitate to contact me at

Melissa Joy, CFP® is Partner and Director of Investments at Center for Financial Planning, Inc. In 2011, she was honored by Financial Advisor magazine in the inaugural Research All Star List*. In addition to her frequent contributions to Money Centered blogs, she writes frequent investment updates at The Center and is regularly quoted in national media publications including The Chicago Tribune, Investment News, and Morningstar Advisor.

*Award was based on job function of the person evaluated, fund selections and evaluation process used, study of rejected fund examples, and the evaluation of challenges faced in the job and actions taken to overcome those challenges.  Evaluations were independently conducted by Financial Advisor Magazine.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.