Broken Promises

Pension plans are disappearing, so take control of your retirement plan

we each bear the responsibility of ensuring our own comfortable retirement. The savings limit for individual 401(k) contributions increased by another $500 this year, which means you can sock away up to $15,500 before taxes ($20,500 if you are 50 or older). If you cannot make the maximum contribution, at least contribute enough to get any match that your employer may offer. According to the Profit Sharing/401(k) Council of America, roughly 78% of defined contribution plans offer some type of match, i.e., free money. Yet surprisingly, their research shows more than 20% of those with access to an employer plan fail to participate. It’s a good idea to have an Individual Retirement Account (IRA) too; it’s not an either/or decision. This year, the IRA contribution limit is $4,000, and you get an extra $1,000 catch-up provision if you are 50 or older.

We can all be a part of the solution by taking responsibility and helping others. For instance, if you own a business, establish a retirement program for your employees if you have not already done so. You will not only attract and retain better talent but you will help your employees create wealth that will carry them through their entire lives.

Mellody Hobson is the president of Ariel Capital Management L.L.C./Ariel Mutual Funds, a Chicago-based mutual fund company and money management firm. She is also a regular financial contributor for ABC’s Good Morning America.

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