By Chris Schanus
The University has two options for those interested in voluntary retirement: the Optional Retirement Plan (403b) and the 457 Deferred Compensation plan.
From Brief, May 14, 2008
The University of Minnesota, along with more than 20 major Minnesota employers, has joined Financially Fit Minnesota, a statewide initiative to help employees plan for their future. As part of the program, the University is encouraging employees to participate in the voluntary retirement plan. The goal is to improve financial literacy and security among U employees.
"As U employees, we have the benefit of great retirement savings plans that offer a lot of options and flexibility," says Carol Carrier, vice president of the Office of Human Resources. "With the voluntary plans, even a modest regular contribution can result in a healthy balance when it grows over time."
Recent economic news has highlighted a problem that has been lingering for years. Many people aren't saving for retirement or are dipping into retirement savings to pay off debts. A 2007 nationwide survey found that 40 percent of workers are not saving for retirement and many more aren't saving enough. Social Security might not be there to bail them out. The Social Security Trust Fund Board reported in March that the fund may be depleted by 2041.
Although most University employees can expect to receive retirement benefits from pension plans such as the Minnesota State Retirement System or Faculty Retirement Plan, income from these plans alone may not be enough to ensure a comfortable retirement, particularly if one considers the rising costs of medical care. According to the Employee Benefits Research Institute, a man with employer-based health insurance who retires at age 65 and lives to age 80 will need $80,000 just to pay out-of-pocket lifetime medical expenses.
Workers age 25 to 34 are typically the lowest savers, but they have the most to gain from starting early on retirement savings. By investing early, one doesn't have to contribute a lot each month to get a sizable retirement nest egg. A worker who begins investing just $20 per month at age 25 will have over $130,000 by age 65.
The University has two options for those interested in participating in the voluntary retirement program--the Optional Retirement Plan (403b) and the 457 Deferred Compensation plan. A variety of investment options are offered in each plan through four investment firms. You can contribute to either or both of these plans. Detailed information about each plan can be viewed on the Office of Human Resources Web site.
The Office of Human Resources also offers workshops to help U employees understand the voluntary retirement plans and make informed investment decisions. A list of workshops can be found at HR benefits. To request a Voluntary Retirement Plan enrollment kit, call Employee Benefits at 612-624-9090 or 1-800-756-2363, and select option 2.
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Last modified on March 9, 2009