ING Encourages Americans to Save the 2% FICA Tax Reduction into their Workplace Retirement Plan
In an effort to promote greater retirement savings in the U.S., ING’s U.S. Retirement Services business is rolling out an advocacy campaign this month for its more than 52,000 defined contribution plan sponsors and 6 million participant customers.
The campaign focuses on the 2% reduction in Social Security (FICA) payroll taxes for 2011, and encourages workers to give themselves a “Retirement Raise” by turning some or all of their extra take-home pay into increased retirement plan savings.
Education materials, available to ING’s customers and business partners, show how a small contribution increase — even just 1% — can help an account balance grow over many years. Information will be circulated by emails, electronic newsletters and on participant web sites.
Additionally, ING has posted an easy-to-use calculator on its corporate website to help demonstrate the potential long-term financial impact of contribution rate changes, including modest increases. The calculator is available to customers and the public at: http://ing.us/individuals/tools-calculators/retirement-contribution.
ING’s efforts coincide with America Saves Week 2011, a national initiative that helps consumers learn how to assess and improve their savings by taking simple steps. One emphasis is on saving automatically, including making regular, automated contributions into employer-sponsored retirement plans. America Saves Week 2011 takes place February 20-27.
“For most Americans, workplace plans represent the cornerstone of their retirement portfolios and are one of the first and best places to start saving. Unfortunately, many of the nearly 75 million workers who have access to plans aren’t maximizing them to the fullest,” said Catherine Smith, CEO of ING U.S. Retirement Services. “As the burden to self-fund retirement grows in our country, we need to find simple ways for people to save more. Contributing the 2% FICA reduction into a retirement plan is the perfect opportunity.”
Americans Admit They Could Be Saving More in their Workplace Plan
In fact, ING conducted a recent study1 confirming that employer-sponsored retirement plans are highly valued by the workers who participate in them. Yet most admitted they could be saving more into their plans, but weren't doing so. Key findings included the following:
- An overwhelming majority (87%) admitted they could afford to increase their annual contribution rate by 1% of their annual salary.
- Almost six in 10 (59%) said they could increase their contribution by 3% of salary.
- Nearly one-third (32%) said they could afford a 5% increase.
The study also revealed that many retirement plan participants under-estimate the power that even a modest contribution increase can produce in helping them reach their retirement goals.
- When asked to estimate the lifetime value of a 2% increase in their contribution rate, most people miscalculated.
- Four in 10 (40%) underestimated the value by 50% or more.
- Nearly one third (32%) overestimated by 50% or more.
“Saving for retirement is a national issue that needs to be addressed,” added Smith. “ING is proud to support America Saves Week, and we know the effort must continue 365 days of the year. We encourage everyone to look carefully at their workplace plans to see if there is room for improving their contribution rates.”
As an industry leader, ING is committed to gaining greater insights into the various factors that affect how people save for retirement. Through research, studies, tools and work done by the ING Retirement Research Institute, ING is a resource for plan distributors and employers seeking new ways to help Americans achieve positive retirement outcomes.
1. The national survey of 1,000 workers currently participating in an employer-sponsored retirement plan, such as 401(k), 403(b) or 457 plans, was commissioned by the ING Retirement Research Institute and conducted online by Mathew Greenwald & Associates through the Research Now panel, a panel that includes a large majority of U.S. households. The data were gathered between Sept. 24 and 28, 2010. Quotas were set to get roughly equal samples of those in their 20s, 30s, 40s and 50s and of men and women. Total data were weighted within each category to reflect U.S. Census statistics of employed individuals. The 95% confidence interval margin of error for the total sample is +/- 3.1%.
ING is a global financial institution of Dutch origin offering banking, investments, life insurance and retirement services to over 85 million private, corporate and institutional clients in over 40 countries. With a diverse workforce of more than 107,000 people, ING is dedicated to setting the standard in helping our clients manage their financial future.
In the U.S., the ING (NYSE: ING) family of companies offers a comprehensive array of financial services to retail and institutional clients, which includes life insurance, retirement plans, mutual funds, managed accounts, alternative investments, direct banking, institutional investment management, annuities, employee benefits and financial planning. ING holds top-tier rankings in key U.S. markets and serves approximately 30 million customers across the nation. For more information, visit www.ing.com/US.