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W W W. M A I N E B I Z . B I Z 27 M AY 1 3 , 2 0 1 9 F O C U S W E A LT H M A N A G E M E N T / R E T I R E M E N T Jennifer Cram, FutureGuard's senior human resources specialist. e prodding pays off. "ey come to our office, we help them log on, and they see how much they have," Cram says. "I had one employee who had a 401(k) for a while, but had never logged on. He logged on and the look on his face was, 'Wow!'" What plan is right? Often, it's the employer who needs education. A number of factors go into deciding what type of plan is right for a business. Smaller employers are likely to select an IRA, says David Hanson, manag- ing partner of IIS Financial Services in South Portland. "ere's less paperwork at the end of the year," Hanson explains. "If they want more of a robust plan and want to make a vesting schedule or, say, a profit-shar- ing option, which is good way to keep employees, they choose a 401(k). Any large employer will have a 401(k)." Gray says a large corporation of 100 employees might be looking at signifi- cant administrative costs for a 401(k). "Costs sometimes are passed along to the employees. Sometimes employ- ers are willing to accept the cost," says Gray. "If it's prohibitive, an employer might say, 'I can't afford to spend $7,000 just to have a plan.'" Smaller companies using a SIMPLE IRA can have much lower costs, due to less administration, Gray says. "at's because the onus is more on the employees and there's no third- party administrator necessary," Gray says. "us, the word 'simple.'" Employee earnings e investment rule of thumb, says Hanson, is for an employee to accumu- late two times his salary by age 35, four times by age 45, and 10 times by age 67. He notes those figures vary according to other financial pieces, such as inheri- tances or spousal money. "Each person's situation is a little different," Hanson says. "But the rule of thumb is you want seven to 10 years of your annual salary in your 401(k) by the time you retire." Workers earning $50,000, who start investing 5% at age 25, for a 5% annual return, will have $500,000 at retire- ment, says Hanson. Employees with a similar salary who start at age 40, will need to invest 16% to accumulate $500,000 by retirement. If they invest only 5%, the outcome at retire- ment will be approximately one-third of the $500,000, or $166,000. Successful plans relate to company success. "Having a solid retirement plan can help with recruitment and with maintaining high-quality employees," says Gray. "If an employer has a solid retirement plan with good choices and good education, that helps with the company's overall success." Recession-proof? Many expect the next recession any day. But experts say that expectation shouldn't disrupt investment. "ere's no way to predict the mar- ket," says Hanson. "You want to look at it as a long-term situation. As you get closer to retirement, you want to be a little more conservative. But you don't just flip the switch and get out of the market." at goes back to education. "ere are always going to be chal- lenges, whether it's a pending recession or job changes or changes to tax laws," says Gray. "Expecting change is almost always going to be part of your plan. Making hasty decisions based on talk- ing heads on TV doesn't make sense." Gray says good education should be tailored to ensure investments are properly allocated along individual employee timelines. "If you've got 20 years in the plan, you can perhaps afford a little more risk than someone with, say, three years," Gray says. Understanding allocations, in turn, helps people recalibrate their portfo- lios if a recession hits. "Recessions happen," Gray adds. "ey create a lot of pessimism, because everyone is always expecting the other shoe to drop, as it did in 2008. But as long as you maintained a forward-think- ing and educated understanding, and you don't panic, you stand to potentially make more money in the long run." Laurie Schreiber, Mainebiz senior writer, can be reached at lschreiber @ mainebiz.biz When managing your family assets, it's not necessarily the size of the portfolio we care about, it's the story behind it. It's why we get to know you and build a relationship before making any financial decisions. From there, we build your wealth the way you want. Partnering with us means more than money—it's about your values, your family, your story. the numbers we get, your story WE VALUE 207. 482.7920 | NorwaySavings.bank FAMILY ASSET MANAGEMENT I N V E S T M E N T M A N AG E M E N T • T R U S T S E RV I C E S • FI N A N C I A L A DV I C E • E S TAT E P L A N N I N G Not FDIC Insured • No Bank Guarantee • May Lose Value Expecting change is almost always going to be part of your plan. Making hasty decisions based on talking heads on TV doesn't make sense. — Vance Gray VanceGray Wealth Management Inc.

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