Saving for Retirement: Advice for Young (and Not-So-Young) Workers

The US Department of Labor blog recently included a post entitled “Saving for Retirement: Advice for Young Workers.” The piece illustrates how investing earlier in your career pays off in a big way. 

In their “Top 10 Things Everyone Should Know about Saving for Retirement,” lifehacker.com describes the payoff of long-term investing a little more boldly: “Compounding interest is so powerful it’s almost magical.” Their Top Ten list includes a number of tips, tools, and useful resources.

Among other things, Lifehacker advises readers not to miss out on an employer’s matching contribution. That advice becomes even more valuable for SHARE members next year, when UMass Memorial doubles its match, as described in the Pension Reform section on page 3 of the most recent SHARE-UMMHC Contract Agreement.

Raise Time Is the Time to Evaluate Your Retirement Strategy

With the SHARE raise coming in October, this is a good time to think about starting or increasing your 401K deduction. Some folks choose this time to increase their contribution because they say they won't miss the money as much if the deduction starts at the same time as the raise.

While all SHARE members automatically accrue toward retirement through the Defined Benefit Pension, the UMass Memorial 401k plan allows you to save for retirement, pre-tax, with UMass Memorial contributing too. If you’ve been to a SHARE Retirement Training, you know that experts retirement say we should think of a solid retirement income as a three-legged stool, with the pension serving as one leg, Social Security as a second leg, and your total savings functioning as the third leg.

Though the coming raise is designed to grow your income ahead of inflation, lots of people need that raise to live on. Deciding the save money with the 401K is a tough choice for many SHARE members. The younger you start, the less you have to take out of your check each week to reach your goals.

Memorial CT Technologist and SHARE Executive Board Member Jay Hagan has served as a member of the SHARE team that has negotiated with management about the current retirement benefits. “I think a lot of SHARE members don’t realize they’re leaving money on the table if they don't save through the 401k,” he says. “My financial advisor tells me, 'if you can afford it, the employer-match is really free money.' You could think of it as the hospital paying you to participate. If you don't use the match, it's like giving the money back.”  

UMass Memorial adds $.25 for each dollar you contribute to your 401k, matching up to 1% of your pay. The importance of investment savings increases in 2017, when the hospital will phase-in changes to the pension accrual rate. At that point, the UMMHC match is scheduled to increase to $.50, and up to 2% of your pay.

If you have questions about SHARE’s negotiated retirement benefits, please contact the SHARE office. If you have questions about your own 401k, contact Fidelity Investments at 800-343-0860, or log on to your Fidelity account at www.fidelity.com/atwork.

In the News: Nationwide Pension Policy Revision

Congress has recently reached a deal that would create an unprecedented nationwide reduction of pension benefits for some current retirees. The deal was tied to a 1.1 trillion dollar spending bill designed forestall a government shutdown.

The change will not have any affect on UMMHC pensions.

SHARE leadership is taking note, however, because the retirees who will be affected have already been pledged--and begun receiving--a certain level of pension income. Thus far, all pensions have been guaranteed under the law (except in certain kinds of employer bankruptcies).

The Washington Post explains: "The deal reached would apply to multi-employer pensions, where a group of businesses in the same industry join forces with unions to provide pension coverage for employees." Nearly 1.5 million retirees could see their regular pension payments reduced by up to 30%. The Huffington Post reports that "talks between Rep. John Kline, R-Min., and George Miller, D-Calif., were designed to preserve benefits of current and future retirees at lower levels than currently exist, but higher than they would be if their pension funds ran out of money."

The Defined Benefit Pension at UMMHC is provided to all SHARE members once they have reached the three-year vesting mark, and will be unaffected by this legislation. UMMHC's Pension program is secure, well-funded, and continues to be protected by law. Still, SHARE will be attentive to these kinds of legal precedents, as we have worked hard to develop and negotiate a sustainable pension system in our own workplace, one that ensures reliable retirement income.

SHARE 401(k) Info Meetings -- Off to a Good Start

The SHARE 401(k) Info Meetings are off to a good start. SHARE members are taking advantage of this opportunity to meet with SHARE Organizers, HR Benefits representatives, and Fidelity representatives for help with saving for retirement. So far people who come to the meetings fall into these categories:

• Sign me up: Some folks come ready to sign up to start saving for retirement in the UMass Memorial 401(k) plan. They sit with a Fidelity rep and sign up on the spot with Fidelity's iPads.
• Tell me about it: Some come to learn about the 401(k) -- how it works, how the match from management works, and how taking out an amount like 1% or 4% would affect their take-home pay. These folks sit together for a short information session with SHARE, Fidelity or someone from HR Benefits.
• I've got a question: Some people come just to get an answer to a specific question.
• I want to increase my deduction: With a SHARE raise coming on October 1st, some folks have decided that this is the perfect time to increase the amount they are having deducted from their check. If you start deductions or increase your deductions at the same time as the raise, you won't notice the difference as much.

It's a relaxed meeting. Feel free to bring your lunch. For the schedule of meetings, see below.

Saving for Retirement: The UMass Memorial 401(k)

SHARE Lunch-time Information Meetings

  

SHARE is partnering with HR Benefits and Fidelity for these 401K Information Meetings because we believe planning for retirement is important for SHARE members.

Location                                                Date         Time

Barre              Conference Room          Sept 5        11:30-1:00

University      S2-351                            Sept 6        11:30-1:30

Tri River        Community Room         Sept 10      11:30-1:00

Hahnemann   Anne Nemitz Room      Sept 11       11:30-1:30

Biotech 3        Seminar Room 227       Sept 13       12-1:00

PTC                 1st floor classroom       Sept 16       2:30-3:30

CBO                 4^th floor Conf Room     Sept 17       12-1:30

WBC                Ford Room                     Sept 18      11:30-1:30

CBO                 4^th floor Conf Room      Sept 19      11:30-1:00

University      S2-351                              Sept 20      11:30-1:30

Memorial       Memorial 1 (near caf.)   Sept 23      11:30-1:30

Memorial       Memorial 1 (near caf.)   Sept 26      11:30-1:30

Stop in during your lunch. It will be a “rolling” meeting so you won’t miss anything if you’re only there for part of it. Bring your lunch and a friend! Questions? Leave a message at SHARE, 508-929-4020 extension 0, and someone will call you back.

• All Welcome •

(Feel free to invite co-workers who aren't in SHARE.) 

______________________________________________ 

How do I enroll in the 401(k)?

It’s easy! You can enroll at the meeting if you want to.

I’m young, I don’t need that yet!

The earlier you start saving, the less you need to save every week.

I’m retiring in a few years, is it too late for me to start?

Better late than never – you can still save, and take advantage of the UMass Memorial match.

Can I change my mind? Can I increase the amount of money I contribute? Can I stop my deductions if I need to? What if I leave UMass Memorial?

All of these questions will be answered at the Information Meetings.

Coming Soon: 401K Education for SHARE Members

As most of you know, SHARE agreed to pension changes in our most recent contract negotiations with UMass Memorial. One change is that the employer match for 401(k) contributions will double when the changes go into effect in 2017. The 401(k) will be important for future retirees, especially young SHARE members who will be in the new plan most of their careers.

Our pension survey last spring showed that half of SHARE members don't currently contribute to retirement savings through a 401(k) at UMass Memorial. Many said that they can't afford to take money out of their checks. Others said that more information about how the 401K works would help them to sign up for it. That's why SHARE is working with Human Resources to plan a series of Information Meetings for SHARE members about how the 401(k) works. We'll answer questions like:

• Do I need to put money into a 401(k)?
• How much money will UMass Memorial put into my account?
• How do I figure out how much money I should have taken out, and how much difference will I see in my check?
• What paperwork do I need to fill out? How do I do it?

We're aiming for September for the Information Meetings. Anyone who decides to open a 401(k) account start to contribute in October when the next raise is scheduled. If you'd like to get involved in planning the meetings, or to request one in your area, give the SHARE office a call (508-929-4020).

Pension Changes Start 2017

SHARE members have a defined benefit pension, which is a very good thing for us, because it provides a guaranteed monthly income in retirement. The 401(k) savings plan is in addition to the defined benefit pension and Social Security.

In contract negotiations, we agreed on future changes to both the defined benefit pension, and the 401(k). No changes will happen before 2017. In 2017, UMass Memorial will double their matching contribution to the 401(k), and change the formula for calculating the pension for 2017 and later. When the changes to the pension come, they will be gradual. SHARE members will continue adding to their pensions in 2017 and after, but at a slower rate. Everything that you have accrued in your pension is protected, and can't be taken away. (So, if you're debating whether to retire in, say, 2016 or 2017, the pension change shouldn't be a factor.) The full details of the pension agreement between SHARE and UMass Memorial are described beginning on page 3 of the most recent contract.

Stay tuned for details about the 401(k) Information Meetings.