Are You Building Enough Wealth to

  Support Yourself in Retirement?

  By   Elaine L. Chao,   Secretary of Labor

  The 21st century offers new opportunities and compelling reasons for

  workers to achieve the American dream of financial independence in  

  retirement.  Fortunately, making that dream a reality got easier when

  President George W. Bush signed the Pension Protection Act of 2006 into

  law.  This has enhanced the ability of millions of Americans to build wealth

  through retirement savings programs.

  Americans today generally are saving less, spending more and living longer

  than previous generations. A longer life span means the need for increased

  savings.  And the sooner workers start saving, the better. In financial

  planning, time is your best friend.

  A $125-a-month investment at a modest 5 percent annual return adds

  up to $50,000 in 20 years, more than $100,000 in 30 years and nearly

  $200,000 in 40 years. The sooner you start putting money aside for your

  future, the longer that money can work for you.

  If you see a dime on the sidewalk, you most likely will reach down and pick

  it up. Yet, many workers are leaving thousands of dollars on the table by

  not signing up for tax-deferred savings programs offered by their

  employers, especially when those employers provide matching funds. The

  problem is that some workers are unsure how to invest.

  The Pension Protection Act helps solve this problem by making it easier for

  401(k)-type plans to enroll workers automatically.  Workers can always “opt out,”

  but they won't “lose out” by not making a decision. Rules proposed by the

  Department of Labor boost retirement savings for these workers by creating

  appropriate default investments for long-term retirement savings.

  Here are a few strategies to help you start taking charge of your retirement future:

  • Participate in your employer’s retirement plan at work, and be sure to take 

    advantage of matching contributions.

  • Increase the amount you contribute to your 401(k) or other retirement plan each

    year.

  • If you’re 50 or older, make additional contributions of up to $5,000 to catch up

    for years in which you did not put money into the plan.

  • Be realistic about expenses in retirement to ensure that you do not outlive your

     savings. Be sure to account for healthcare costs such as prescription drugs.

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Secretary of Labor Elaine L.Chao also serves as Chairman of the Board of Directors of the Pension Benefit Guaranty Corporation. For more information, go to www.dol.gov/EBSA.