Save up: tips to help employers and employees conquer retirement challenges.

• Author: Bennett, R. Brent
• Position: Money Talk

Since no one under 90 years of age has dealt with a financial crisis of the magnitude we're experiencing now, questions about retirement income and strategies are understandable.

Many 401 (k) participants are challenging the appropriateness of their risk tolerance and future strategy. Retirement plans have been a staple employee benefit for some time. Currently, they remain one of the few areas where money can grow without the drag of taxes. But today, there's certainly a degree of disenchantment due to the drop in value these plans have experienced.

Plan sponsors must focus on participant outcomes and the increased scrutiny they play in the role of a plan fiduciary. While they have no control over the direction of the stock or bond market, plan sponsors do have control over their plan provider, specific investment options and the advisor they choose to work with their participants.

A 401(k) matching contribution or profit sharing program involves the sharing of an employer's retained earnings or profits with employees. Recently, many employers have needed to suspend matching in order to meet payroll or other operational costs.

In fact, some business owners are trying to decide if their plans should be retained at all. Their employees are disgruntled by the decreasing value, and the business owner considers the related costs of such plans and may think these outweigh the unappreciated benefit.

However, a successful business must retain its best employees who rely on these benefits for retirement, and to justify softer pay increases, long hours and their continued loyalty.

Questions Answered

The pragmatic business owner need only take a deep breath and ask some basic questions about their retirement plan. While looking long-term is indeed the goal, some short-term maneuvering is also recommended.

First, a plan's sponsor should have an IPS (Investment Policy Statement). This document is both a blueprint and report card for the retirement plan. A plan's advisor should assist in the creation and update of this document and many providers will have a template as a starting place.

The plan sponsor should understand the difference between a "provider" and an "advisor." The provider, the investment platform itself (i.e. Fidelity, John Hancock or any other investment vendor), is an important component of the retirement plan. Ease of use, appropriateness of investments, the plan's growth, fees and goals should be reviewed annually.

A plan "advisor"...