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Ways Your Employer Can Help You Plan for Retirement

Overwhelmed by your impending retirement? Your employer may be able to assist with the transition.

Daunted by all the retirement decisions? Some employers bring retirement advice to the workplace. Several years ago, Barbara Linnehan-Smith, a teacher in Portland, Maine, began attending retirement seminars offered through her union to learn about her pension formula, Social Security eligibility and retiree health insurance. Although Linnehan-Smith, 61, has no immediate plans to retire, "it was really important to get a feel for the whole process," she says.

Your company 401(k) plan may also be a source of help. Increasingly, plans offer online tools and one-on-one phone conversations with financial planners to deal with everything from Social Security strategies to retirement spending to asset allocation. “It’s a concierge service to help you navigate the process,” says Rob Austin, director of retirement research at Aon Hewitt, a human resources firm.

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Some will even set up a retirement paycheck for you. Almost half of employers in a recent Aon survey allow 401(k) participants to choose an automatic payment from the plan in retirement, and 30% offer a professionally managed account with a drawdown feature. Another 9% offer a managed payout fund, which uses a withdrawal strategy designed to produce lifelong paychecks (but without the guarantee of an annuity).

If you’re deciding between leaving your money in the plan and rolling it over, you’ll have to weigh the costs, services and convenience of your 401(k) against the flexibility and wider range of investment choices in an IRA. Keep in mind that large plans have access to institutional pricing, which means lower fees. “If your 401(k) happens to be reasonably priced and gets the job done, by all means, keep the money there,” says Michael Kitces, a partner and director of wealth management at Pinnacle Advisory Group.

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