Newspaper article THE JOURNAL RECORD

Authorities Declare Tuesday as First-Ever 401(k) Day

Newspaper article THE JOURNAL RECORD

Authorities Declare Tuesday as First-Ever 401(k) Day

Article excerpt

Promoting the potential retirement windfalls available to Oklahoma residents, financial authorities have declared Tuesday to be the first-ever 401(k) Day.

The goal of the event, spearheaded by the Profit Sharing Council of America, is to encourage employees to save an extra 1 percent of their salary in a 401(k) plan beyond what they already invest.

A 401(k) plan is a pre-tax savings plan for employees that can only be offered through a business. There is no minimum amount that must be placed into a 401(k) plan.

Officials at Bank of Oklahoma -- one of the state's largest providers of 401(k) plan service, with a client base of more than 300 private and public employers -- hope local employers will take advantage of 401(k) Day to promote their own savings plans to employees. Ellen Fleming, senior vice president of trust employee benefits at Bank of Oklahoma, notes that a long-term strategy of limited investment in a 401(k) plan can still yield sizable dividends for Oklahomans.

"A 25-year-old earning $25,000 per year is likely to have an extra $100,000 at retirement if he or she saves just 1 percent (of their annual salary) more per year," she said.

Fleming said that estimate assumes the person puts away 1 percent of their salary in a 401(k) each year for the next 40 years, from age 25 to age 65. That estimate also assumes an annual average return of 8 percent during that period, combined with 3.5-percent annual growth in the person's salary. And the estimate doesn't include employer-matching contributions, which are a component of many 401(k) plans.

While every penny counts for people at that $25,000 income level, Fleming said a 1 percent contribution amounts to only $4.80 per week. "And $4.80 a week, we don't think is unrealistic for anybody to save," she said.

And Fleming said an estimated 8 percent annual return over a 40- year period is "conservative" given the performance of the stock market in recent years. …

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