Michael A. Milazzo, CLU, ChFC

Registered Principal


The Meridian Financial Company

556 W Jericho Tpke, Suite 2, Smithtown, NY 11787


Phone:  631-979-4223

Fax:      631-656-8199 




July/August 2018

Beyond Plan Defaults

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If you have a 401(k) plan at work, you have a powerful vehicle through which you can save for retirement. Today, more employers are offering automatic tools to help participants put money away into their 401(k)s. While these work for many employees, they may not be right for you. Here’s a look at some of these auto tools and ways you might improve on them.

Auto Enrollment
The idea behind this innovation is that employees fail to contribute to a retirement plan because of inertia, so they are automatically enrolled in the plan when joining the company (with the choice to opt out). Contributing toward your retirement is good, so there’s little to improve on here. You might, however, compare it to a Roth 401(k) plan if you have that option.

Auto Contributions
With this option, employers choose the percentage of employees’ salary to initially contribute to a plan. This is often a low number: With many plans, 3% is the default rate. Anything, of course, is better than nothing. But you will typically have the option to raise or lower your contribution on your own. Consider raising it, especially if you’re not putting away enough to match a potential employer contribution match.

Auto Escalators
Automatic contribution escalators raise the percentage of salary contributed to a 401(k) plan over
time. This is an attractive way to bump up your retirement savings efforts as you receive promotions and pay increases. You might even decide to raise it more on your own, perhaps up to the maximum allowed by the plan.

Auto Accounts
The default account of the majority of plan sponsors is a target date fund — a diversified fund that includes stocks, bonds and cash. Typically, this is a somewhat conservative way to invest according to your retirement timeframe. However, you may want to choose your own investments if you have a more conservative or aggressive approach to investing.

Talk to your financial professional to learn how investing in a 401(k) plan or IRA can help you prepare financially for retirement.


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Michael A. Milazzo is a Registered Representative of and offers securities through Cadaret, Grant & Co, Inc, a member of FINRA and SIPC. The Meridian Financial Company and Cadaret, Grant are separate entities. I am registered to sell Securities in the following States: NY, PA, NC, FL, CO, ID.
The Meridian Financial Company and LTM Client Marketing, Inc. are unrelated companies. This publication was prepared for the publication’s provider by LTM Client Marketing, an unrelated third party. Articles are not written or produced by the named representative.

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