Vanguard Introduces 401k Statement Featuring Interactive Retirement Income Estimating Tool
VALLEY FORGE, PA, October 20, 2005 -- The Vanguard Group today unveiled an interactive and personalized account statement for participants in employer-sponsored plans to help them better plan for a financially secure retirement. The new statement will be distributed to 2.7 million participants beginning in December 2005.
A key component of the new statement is the Your Retirement Income OutlookTM estimator, which shows participants how much money they will be able to withdraw during retirement based on their current account balance and savings rate. Additionally, using the statement's interactive feature, participants may personalize their income outlook by visiting Vanguard.com(R) or calling to speak with a Vanguard retirement associate, where they can add future income sources (such as defined benefit plans, IRAs, and Social Security benefits) or change their retirement age and current income. The statement shows participants how their desired income compares with their projected income. To address any shortfall, participants are provided with a recommended savings rate to help them meet their actual income needs during retirement.
"Our research indicates that 80% of investors recognize that they are not saving enough for retirement or are unsure of how much they need to save to meet their future spending needs," said James Norris, Principal, Vanguard Integrated Retirement Plan Solutions. "We believe that our new statement is the first of its kind to help participants solve this 'retirement readiness puzzle' by proactively providing them with a comparison of what they'll need to spend during retirement to what they'll actually have each month."
Vanguard's new statement also provides participants with a pie chart comparing their current asset allocation to Vanguard's recommended model allocation. This comparison serves as a call to action for participants to focus on the highly critical investment decision of asset allocation. For example, a participant overweighted in short-term reserves may revisit his or her asset mix by completing a risk questionnaire on Vanguard.com or by contacting a Vanguard retirement associate. A revised asset allocation will appear on their next statement.
"A key piece of the retirement readiness puzzle is maintaining an appropriate asset allocation during saving years," said Mr. Norris. "By providing a model asset allocation mix based on the participant's age, we are setting the cornerstone for a sound retirement program."
Vanguard also expects the new statement to benefit plan sponsors from a fiduciary standpoint. "The statement will help participants form sound decisions that can increase savings rates and reallocate assets to appropriate investments," said Mr. Norris.
About Vanguard
The Vanguard Group, headquartered in Valley Forge, Pennsylvania, is the nation's second-largest mutual fund firm and a leading provider of employer-sponsored retirement plan services. Vanguard manages nearly $895 billion in U.S. mutual fund assets, including more than $265 billion in employer-sponsored retirement plans. Vanguard offers 130 funds to U.S. investors and more than 40 additional funds in foreign markets.
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