Guidelines for Making Good Use of Employer Plans

For many women, pensions are just not available. The realities of family life are such that women spend on average only 27 years in the workforce, compared to 40 years for men. Our current retirement system wasn’t designed with working women in mind: Their part-time and intermittent employment due to family caregiving responsibilities can mean that they aren’t eligible or can’t vest in the plan. If you or your spouse have a choice about employment, and other things are equal, look for an organization with good retirement benefits. Most of all protect your future security by making the best use of what is available to you.

Here are some things you can do to make the best use of the benefits you do have:

• Check on whether your employer is doing well to increase the chances of a good outlook for continued employment and continued benefits.

• Save at least the amount matched by your employer in 401(k) plans and other defined contribution plans.

• When investing funds, don’t put all your eggs in one basket—diversify.

• Don't use retirement money for non-retirement purposes.

• If you are thinking about switching jobs, remember to look at the vesting schedule where you are and stay at least that long.

• If you are self-employed, don’t forget to save—you need retirement income too.

• Remember that plan funds are an asset at the time of a divorce, and in the long run, might be the most important asset you have.

• Don't retire too early, and remember that your money needs to last a lifetime.

Three more tips:

• File and save all your plan information, including benefit statements and Summary Plan Descriptions.

• Keep track of any pensions or 401(k) account balances that you earned with prior employers, either by saving your latest statements or by rolling over the funds into an IRA that you control. If you lose contact with a former employer whose defined benefit pension plan covers you, the PBGC may be helpful. Their booklet “Finding A Lost Pension” is available at http://www.pbgc.gov/docs/Finding_A_Lost_Pension.pdf.

• When leaving a job before retirement, be careful about cashing out any lump sum benefit. You can avoid IRS penalties and preserve the money for retirement by taking a direct rollover to an IRA or to another employer’s plan.