401k Plan

Selecting Investment Options for 401k Plan Trustees

Atlantic Financial can assist your company with virtually any mutual fund or money management choice. Atlantic Financial works with over 18,000 different mutual funds. Because we work with numerous fund companies, we can help you to choose the funds that best fit the needs and goals of your plan.

Our plans also include detailed advice and service for retirement plan fiduciaries and the participant employees. Your company's 401k plan will have the widest possible selection of investment choices including the following:

Stocks (we have the ability to offer stocks from all stock trading exchanges)

Bonds (numerous options, including corporate, municipal, and government)

Mutual Fund Selection Assistance (you have a huge variety because Atlantic Financial offers over to 18,000 funds to choose from)

Money Market Accounts (money market accounts are an extremely important offering for your plan participants)

CDs (a large variety of cd's to choose from)

For many years, employers in the United States, both large and small, have provided tools their employees are using to accumulate retirement savings. These plans not only help employees save, but help employers to attract and retain quality employees in their companies.

Also See:
401k Plan | 401k Plan Services | 401k Plan Investment Options | 401k Plan Setup

Challenges and Solutions for a New Generation of Retirees

Guided by the Employee Retirement Income Security Act of 1974 (or ERISA), employers have helped millions of Americans transform the concept of retirement security from a largely government and employer provided benefit into one that individuals control. With the ability to choose investments in their retirement plans, employees feel more in control of their retirement future. In the process of this shift, both government and companies have helped create the largest generation of individual investors in history. A transition is now under way as these individual investors begin a shift from accumulating assets, to managing the distribution of income from those assets over the course of their retirement lifetime.

Boomers and Upcoming Retirement

At this time, over 6,000 baby boomers turn age 65 every single day. Imagine the sheer number of people retiring today, and over the next several years. In fact, if you consider the tremendous size of the generation currently moving into retirement, one issue is clear: It will take the active participation of all three constituencies employees, employers, and financial product and service providers to effectively address what's next for retirees. In America, 76 million people from the ages of 46 to 64 are approaching retirement today.¹ For many of these baby boomers, more half of their adult lives lie ahead of them in retirement. And with this retirement, comes years of living off the income from their savings and investments. The sheer numbers help define a new sense of urgency in assisting with the retirement transition of the DC generation.

Boomers Face a Different Kind of Retirement

Compared to their parents, baby boomers (those born between 1946 and 1964), typically have higher income, are preparing for retirement largely at the same pace, and have accumulated more private wealth. On the whole, boomers are on track to have higher income in retirement than their parents, and they appear much less likely to live in poverty after they retire

Although it appears to be favorable retirement picture, a recent survey suggests that the lack of a key element a financial plan may undercut the financial security of this generation of Americans. Research shows that four out of five people who are either retired or planning to retire soon don't have any plan for securing lifetime income. In fact, in a report by the Life Insurance Management and Research Association International, it's been found that just 11% of retirees and only 21% of pre-retirees have drafted a formal, written plan that matches their income sources in retirement to their expenses.

Essentially, retirees must change their financial thinking as they transition from full-time jobs and wealth accumulation to retirement and wealth drawdown. Essentially, if they don't have enough savings, they won't have enough retirement income.

In addition, retirees today will face greater challenges than their parents did. They will be funding and managing retirement largely by themselves. The role Social Security will play in post-employment income replacement is expected to continue to decline. Some state that Social Security income may even be non-existent in the near future. The CBO's March 18 report states that the impending wave of retirees has become a source of concern for two reasons; first, the population of retirees will grow much more quickly than the taxpaying workforce, at a time when average benefits per retiree are expected to continue rising. Those developments will place severe and mounting budgetary pressures on the federal government. Second, some researchers have questioned whether many boomers are accumulating enough wealth to pay for an adequate retirement. Not only could inadequate saving leave boomers poorly prepared, but it could compound the government's budgetary problems by limiting the growth of investment, productivity, and wages (which drive federal revenues).

The assessment leaves in question whether Social Security will be able to keep up with the growing population of retirees and, perhaps more critically, how government-provided Medicare will be affected by the growing demands on its resources. The budgetary picture is complicated further by the fact that health care costs are rising faster than inflation, and companies are shedding retiree health care benefits.

In light of these realities, Americans - especially those in the baby boom generation - will have to understand better than ever before the risks they may encounter, and plan more effectively than ever before in order to manage their lifetime income in retirement.

Responding to Great Challenges

In the face of these financial planning challenges, Fidelity has studied the issues and is responding to the needs of employers and employees alike. Fidelity is setting out to create the most comprehensive, cost-effective, easy-to-use suite of planning products and services for retirees and pre-retirees that's ever been created, Cynthia Egan, executive vice president, told a gathering of Fidelity corporate clients recently. Egan outlined four key tenets employers and their retirement plan service providers can address together to help meet the lifetime income planning challenge facing today's retirees and pre-retirees: 1) education, 2) service, 3) income product solutions, and 4) tools and technology.

Fidelity's research is available to employers in the white paper report Lifetime Income Planning: America's Lifetime Income Challenge. In its research, Fidelity identified five major risks that retirees and pre-retirees face in managing their retirement lifetime income. The risks are:

Inflation risk The high likelihood of continued inflation makes it imperative to have investments with the potential to beat inflation especially over the longer retirement that today's retirees can anticipate. In addition, general inflation may not capture the impact on retirees of rising medical expenses. Numerous studies show that the majority of lifetime medical costs are incurred in the last few years of life, posing additional high costs in the very last stage of retirement.

Longevity risk A longer, healthier life is a good thing, as long as you plan for it, Egan says. The disconnect occurs when people plan their lifetime retirement income based on life expectancy statistics for the general population, and not on their own personal probability of survival. The Society of Actuaries Annuity 2000 Mortality Table suggests that people should be planning to manage their retirement income and expenses for 10 to 15 more years than they currently may expect.

Excess withdrawal risk The risk of depleting retirement assets increases as withdrawal rates increase, particularly at rates over 4% annually. Retirees need to carefully consider the withdrawal rates they employ, especially in the early years of their retirement. Careful planning can help sustain reasonable higher withdrawal rates later in retirement,
with less risk of depleting assets in their lifetime.

Health care expense risk If they are not provided for, health care costs pose very real risks of throwing lifetime income plans off track, particularly in light of health care inflation rates today. Most retirement experts now believe that health insurance itself has become one of the core elements of current retirement security, along with pensions, personal savings, and Social Security.

Asset allocation risk Retirees should recognize that they may have sufficient time to benefit from a wise asset allocation strategy and a carefully sequenced plan for asset drawdowns. Effective strategies for asset allocation and distribution can help maximize the long term potential of any given pool of wealth. Adopting a strategy that is too conservative can increase the risk of retirees' outliving their assets.

Lifetime planning services

Having identified the risks, Fidelity's education, service, product, tools, and technology solutions focus on:

Educating employees and retirees to help them understand the risks they face


Giving people an accurate planning baseline for lifetime incomes


Teaching employees and retirees how to manage risk by providing the information and tools they will need to create income sources they won't outlive
The Fidelity Retirement Income Advantage^TM offering marshals Fidelity's organizational experience and expertise in financial planning, investing, and income management to create a set of services designed to help people live for the retirement they have worked for and to give them the confidence they will have enough money to last their lifetime, Egan says. With Fidelity Retirement Income Advantage, our customers have access to products, services, and resources that are comprehensive, and that can enable investors to build, monitor, and maintain an income plan for managing their financial lives in retirement. The elements of the program include:

Educational workshops hosted on site to reach pre-retirees and, as appropriate, off site to reach retireees as well.

Educational materials and online resources at Fidelity NetBenefits and Fidelity.com, and seminars

Income planning consultations with specially trained representatives, either on the phone or face to face in local Fidelity Investor Centers

A suite of planning management and monitoring tools, many accessible through NetBenefits and Fidelity.com, including Fidelity Retirement Income Manager Account, a specialized retirement income account that will serve as command central for retirees to manage their assets and income in retirement.

Finding Solutions

During the fourth quarter of 2003 and throughout 2004, 10 clients that sponsor workplace retirement savings plans for which Fidelity provides administrative recordkeeping services piloted Retirement Income Advantage with their employees. At these companies, where employers are committed to helping their retirees and employees ensure retirement security, Fidelity is conducting its Five Golden Rules of Retirement Income Planning seminar. Seminar attendees learn that a more successful retirement begins with 1) planning, 2) managing risks, 3) aligning resources and expenses, 4) customizing an income strategy, and 5) activating and managing the plan to stay on track. Most participants in workplace retirement savings plans for which Fidelity provides administrative recordkeeping services will find the Retirement Income Planning tool at NetBenefits. Here, employees and retirees will find a gateway to an online retirement income planner as well as a tool that will provide a retirement income quick check or full income review.

Making Sure

Ron Wyse, vice president of Benefits at Harris Corporation, explains the company's decision to pilot Fidelity Retirement Income Advantage services with its employees. Making sure this generation of Americans effectively manages retirement income over the course of their retirement lifetime is the next financial challenge, he says. Harris recognizes the responsibility to help employees and retirees meet the challenge and succeed.

Currently, most employees can access the Retirement Income Planner on NetBenefits for an in-depth analysis of their income planning needs. All participants can call 1-800-887-4015 to speak with specially trained Retirement Specialists; they can begin the retirement planning process if appropriate. They also can ask for A Fidelity Perspective: Planning for Retirement Income, a consumer-focused white paper report. Throughout 2004 and into 2005, Retirement Income Advantage educational materials, communications programs, and workshops are being integrated into Fidelity's overall communications and education programs for workplace retirement savings plans.

401k Features

401k Survey finds investors, employees un-informed

Fidelity 401k Plan Advisor



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