Transcripts

"Money File"-Secret 401k Savings

SUZANNE PRATT: In tonight's money file, changes to your company's 401 (k) plan could help you save money for retirement, whether you want to or not. Here's Gail Marks Jarvis, personal finance columnist at the "Chicago Tribune."

GAIL MARKS JARVIS, PERSONAL FINANCE COLUMNIST, CHICAGO TRIBUNE: Brace yourself for a surprising paycheck, one that might look like it shrunk. If you get one, it could mean you work for an employer that's taking on a new role, the role of investing baby-sitter for the company 401(k) plan. In other words, too many workers have failed miserably saving and investing, so employers are stepping in, yanking money from employee paychecks and investing it for them without asking for permission first.

That's a tremendous change in the 401(k) system. It's aimed at heading off a retirement crisis. Even on the verge of retirement, half of Americans have saved no more than $88,000, or only $650 a month to live on. So instead of waiting for employees to sign up for 401(k)s, employers are doing it for them. Instead of waiting for employees to pick the right mutual funds, employers are taking a stab at it. Instead of waiting for employees to scrounge up larger savings, employers are re-routing parts of raises from the paycheck to the 401(k).

Not all employers are doing this, but the trend is growing. Congress gave the green light last year. If you don't like it, you can tell your employer to stop and they will. But the bet is that you won't bother. That's part of the problem with the old 401(k) system, people didn't bother. I'm Gail Marks Jarvis