Retiree benefits vary even at `best' workplaces

October 14, 2007|By Janet Kidd Stewart

Work for a big company - or, better yet, one of those perennial best-workplace contest winners - and you're loaded up with benefits, right?

Not necessarily. Soaring health costs and a shift away from guaranteed pensions have taken their toll.

For example, just a third of companies with 200 or more workers offer retiree health benefits, according to a 2006-2007 survey by the Kaiser Family Foundation and Health Research and Educational Trust.

Among this year's winners of AARP's Best Employers for Workers Over 50 awards, 31 of the 50 companies on the list offer retiree health benefits. That's a significantly higher rate than the Kaiser study found, but it still means that a good chunk of these "best" workplaces for older workers are not providing health benefits to retirees.

Just 29 of the companies on the AARP list offer an employer match for a 401(k) retirement plan, though they might offer retirement pay in other ways.

Several other perks - including flexible work arrangements for retiree part-timers and automatic enrollment in retirement plans - were stressed in choosing the best workplaces, said Deborah Russell, AARP's director of work force issues.

The organization's annual list - along with new retirement plan data from benefits consultant Hewitt Associates - provides a glimpse at some of the better benefits being offered.

Finding an employer that offers all of them is probably unrealistic, but knowing a few of corporate America's benefit benchmarks might help as you consider future jobs, or your career path at your current one.

Show them the money.

To show workers that a company has their long-term financial future at heart, it's hard to beat cold, hard cash.

Irene Hollingsworth of Memphis, Tenn., a former secretary, retired at age 60 with a traditional pension, a 401(k) account and subsidized health benefits from First Horizon National Corp., parent of First Tennessee Bank.

First Horizon, an AARP award winner, offers a traditional pension and a 401(k) with employer match, along with stock options and catch-up provisions for workers older than 50.

"Had it not been for those benefits I couldn't have possibly retired when I did," said Hollingsworth, 71. She used the health benefits as a bridge until she was eligible for Medicare at 65.

Among large employers surveyed recently by Hewitt, 46 percent offer traditional pensions, and most contribute to a 401(k)-type retirement plan. The most common employer match is 50 cents for every dollar contributed, up to 6 percent of pay, said Pamela Hess, Hewitt's retirement research director.

Hess said it has also become common for employers to offer catch-up provisions in their 401(k) plans, which allow workers older than 50 to stash away an extra $5,000 this year.

The newer Roth 401(k) plans are less common, but older workers should watch for them, Hess said. With less time until retirement, the benefit of years of tax-free compounding becomes less significant, but money in a Roth plan can be a nice diversifier because it is after-tax money that is typically tax-free upon withdrawal.

A little advice, please.

Another perk gaining in popularity is investment advice, Hess said. About 40 percent of employers in the Hewitt study offer investment advice, up from 25 percent a few years ago.

At SC Johnson & Son Inc., a Racine, Wis., maker of household products that ranked No. 1 on AARP's list, workers have access to financial planners at a subsidized cost, along with many other perks.

Healthy options

With fewer employers offering health benefits to retirees, studying your options for financing health care - such as health savings accounts at work or a private insurance plan - is crucial, said Jeff Munn of Hewitt's health management team.

"Some people close to retirement have saved a lot of money, so a $2,000 medical expense is not as big a deal," he said. People in that situation might be able to save big on premiums if they can take the risk of hitting the out-of-pocket maximum on a high-deductible health plan, he said.

For Doug Drake, 66, all of those benefits take a back seat to the phased retirement he began in June after 44 years with Stanley Consultants in Muscatine, Iowa, another AARP winner.

Drake said being able to come back for a little part-time work has made all the difference, making it another offering worth investigation.

Have a retirement question? Write to yourmoney@tribune.com, or via mail at Your Money, Chicago Tribune, Room 400, 435 N. Michigan Ave., Chicago, Ill. 60611.

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