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Some companies help employees be more financially savvy
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Sun Sentinel (MCT) - Paula Vroman is still on track to retire in three years. Despite the stock market's volatility, Vroman has been saving 15 percent of her annual income in her 401(k) retirement account with her employer, NCCI, a Boca Raton, Fla., insurance data firm.
Highlights
McClatchy Newspapers (www.mctdirect.com)
11/19/2008 (1 decade ago)
Published in Business & Economics
About 10 months ago, Vroman, 59, who oversees NCCI's mailroom, moved her savings into the Charles Schwab Stable Value Fund designed to preserve capital.
"Compared to others I've heard, I'm in good shape," she said. "I'm conservative and I live within my means."
NCCI brings a Charles Schwab representative and other financial firms in for employee workshops. Some companies are recognizing that employees need help with their investments and are offering online tools and classes.
"Employers have seen if you're financially stable, you're more likely to be happy with where you're working," says Alexander Watts, chairman of the finance, banking and entrepreneurship department at Northwood University in West Palm Beach, Fla.
But it's also up to workers to educate and protect their retirement investments.
"Financial management isn't predicting what's going to happen in the future. It's managing your financial conditions no matter what the conditions are," Watts says.
Don't make the mistake of rebalancing a portfolio without assessing goals, says Lynn Finkelstein, national director of Ernst & Young's Employee Financial Services, which developed a financial education program for Florida's state employees.
"Unless you need the money immediately or want to retire in three years, you need to look at a long-term strategy," Finkelstein says.
Still, the Ernst & Young division has been getting 700 to 800 calls a day during the financial crisis.
"People we have worked with aren't panicked. They have a long-term strategy in place. It was those who haven't used our services," Finkelstein says.
Victor Garcia, credit services manager at NCCI, plans to get an annual portfolio review in November from financial counselors, offered for free at work through Charles Schwab.
"I haven't done any changes," Garcia, 41, said of his 401(k) account. "I want to see what's going to happen with the recommendations."
Co-worker Stephanie Tetreault, now 25, is less concerned about the market's tumble given she has 40 years until retirement. But she wants to be more educated about her investments and plans to attend a class on financial basics offered at work.
"Right now I feel like I'm getting the (mutual fund) shares on sale," said Tetreault, who invests 6 percent of her annual income, the percentage that NCCI matches in her 401(k) account.
Watts, the Northwood college professor, says for a worker under 30, "this is the time you take your risk. You have 10 to 15 years to make up for it."
The general rule is the closer you are to retirement, the more conservative the portfolio: less in equities, more in bonds and cash, he says.
Finkelstein of Ernst & Young recommends investing in a 401(k) account at work before making outside investments because employers often offer a match to your contribution. For an investment outside a 401(k), check the fees and challenge the promised annual return. This is where financial literacy can really pay off.
"Peel back the layers of the onion and understand the fees," she says.
___
© 2008, Sun Sentinel.
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