First Person: I’m Part of the Lucky Half with Retirement Benefits

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According to a new Employee Benefit Research analysis, only half of workers participate in workplace retirement plans. I spent the first half of my career without a company-sponsored retirement plan. I was fortunate enough to start my career when the Roth IRA was first introduced so I could save money on my own. Looking back, though, I can see that I would be financially lost without a 401(k) plan. According to a recent article by U.S. News & World Report, only 46 percent of employees contributed to a workplace retirement plan last year. Seventy-eight had a 401(k), while 21 percent had a traditional pension.

Forcing me to save

I don't know the psychology behind the fact that I save more money into a 401(k) rather than a Roth IRA. I would much rather be able to withdrawal money tax free when I'm retired than receive any kind of tax benefit now. But I'm just not as disciplined about saving with my Roth IRA. I could set up automatic deductions from my bank account so that money could be moved to my Roth IRA, but I don't do it very often. Maybe I'm afraid I won't have enough left in checking. It's less painful to have a percentage of my paycheck automatically deducted and transferred into a 401(k) plan.

Saving less as I get older

According to the research, participation in retirement accounts jump as workers get older. Thirty-four percent of people in their 20s participate compared to 62 percent of people in their 50s. People with more money naturally participate more than people making $20,000 a year. I had fewer financial obligations in my 20s and 30s, which is why I contributed more at that time. Now that I have children in college, I don't have to put my retirement savings on the backburner. If the money doesn't come out of my paycheck before I see my paycheck, it's not going to go for retirement.

Letting someone else worry

Although I have more control with my investments within my Roth IRA, control is not always a good thing. I prefer my 401(k) plan because I only have to check it about once a year. My personal rate of return for my 401(k) this year was 7 percent versus a negative 6 percent return for my Roth IRA. I like the fact that my 401(k) gives me an update on my retirement income estimate based on what I've saved so far. I worry a lot less about the mutual funds in my 401(k) compared to my individual stocks in my Roth IRA.

I'm also lucky that my 401(k) allows me to contribute a percentage for a Roth 401(k) as well as a percentage for the before-tax savings if I choose. The Roth 401(k) was a fairly recent perk offered within my plan. I've heard a lot of experts suggest people invest first in a Roth IRA before a company-sponsored plan if they don't receive any matching contributions, but the Roth 401(k) is just as good. While I am employed with a company that offers a retirement plan, I plan to take advantage of it. If I ever work as an independent contractor again, I'll return to my Roth IRA. For me, having access to a 401(k) has been a financial lifesaver. I just wish it was a perk more companies offered.

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