Articles

Help Your Participants Make the Most of their Retirement Plan

Dec 15, 2020

You're most likely continuously looking for ways to enhance your retirement plan in a way that's beneficial to employees. But are your improvements effective?

Find out how an analysis can measure how your employees are progressing relative to their retirement goals.

Newport has developed an analysis that measures how plan participants are progressing relative to their retirement goals. By gathering research on what other firms consider adequate savings to meet retirement expenses, we are able to perform an independent analysis on the plan.

We use two lenses for examining a participant "retirement readiness."

The first, more simplified lens, is the retirement savings multiple. Most investors have read various rules of thumb that help them gauge whether or not they are "on track" with their retirement savings. These benchmarks often come in the form of a retirement savings multiple: For instance, a participant might want to have x times his/her current salary in their retirement savings account. However, that's not always easy to demonstrate.

Newport can work with you to illustrate retirement savings multiples for employees.

Our second lens involves more complex modeling at the participant level. This involves projecting account balances forward to retirement for each participant, and forecasting retirement income produced by the accumulated wealth. We tailor the analysis for each participant and consider factors such as contribution rate, company match, tenure, expected social security income and current balance.

Finally, we calculate the replacement ratio for each participant and aggregate these at the plan level. A replacement ratio, which is projected income / projected salary, represents the income a retiree receives from their savings as a proportion of the salary they earned at retirement. An analysis of replacement ratios can help an employer evaluate the "retirement readiness" of their participants, and consequently, the effectiveness of their plan. The analysis is also helpful in analyzing the impact from changes in company match, auto-increase, and other plan features.

To learn more about how we can help you with “Retirement Readiness Review” contact your Newport representative or contact Newport’s Fiduciary Services at 407-333-2905.

 



Newport Group, Inc. and its affiliates provide recordkeeping, plan administration, trust and custody, consulting, fiduciary consulting, insurance and brokerage services.
 
For Institutional Use Only. Not Intended To Be Used Or Distributed To The General Public.
 
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Newport Group, Inc. and its affiliates provide recordkeeping, plan administration, trust and custody, consulting, fiduciary consulting, insurance and brokerage services.
Investment Advisory and fiduciary consulting services are offered through Newport Group Consulting, LLC, a registered investment adviser and wholly owned subsidiary of Newport Group, Inc.
Securities are offered through Newport Group Securities, Inc., a dually registered investment advisor and broker dealer, member FINRA and affiliate of Newport Group, Inc. Securities in California are offered under the Newport Securities Insurance Services. See BrokerCheck for more information. Other insurance products may be offered by Newport Group, Inc.
For more information about Newport Group Consulting and its services, please refer to our Form ADV Part 2A.
Newport Trust Company, is a New Hampshire state chartered trust company and wholly owned subsidiary of Newport Group, Inc. Newport Trust Company provides independent fiduciary and trustee services for employee benefit plans.