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Fiscally Unfit

Fiscally Unfit

A survey shows Americans are unprepared for retirement and financial uncertainty.

John Rossheim / Monster

“With a managed 401k account, the employee hands over management of their retirement money to a service, which periodically rebalances the portfolio” as might be required by a new salary, advancing age or changing market conditions, says Don Bartolai, a principal in the Chicago office of Mellon Human Resources and Investor Solutions. The employee pays a substantial annual fee for these added services.

Voluntary Benefits Seen as a Good Thing

If workers can’t get their employers to pay for financial protection like disability and life insurance, they can hope their company offers these as voluntary (read: employee-paid) benefits. In the survey, 62 percent of respondents say they like the convenience of paying for these benefits through payroll deduction.

There are other advantages to voluntary benefits. “When an employer can deliver a large group of employees to a service provider, it reduces the costs,” Woerheide says. Workers also gain by simply being presented with a menu of financial services they might not otherwise consider.

Workers Say They Lack Access to Financial Education

A mere 40 percent of workers say they understand which company benefits meet their individual needs. This flies in the face of efforts some companies are making to demonstrate the value of benefits to employees.

“Through their HR departments or program vendors, employers these days are making a lot more tools available to employees to increase appreciation of what the programs are,” says Pat Kendall, senior vice president of Diversified Investment Advisors in Newton, Massachusetts.

Some experts say most Americans simply don’t understand the fundamentals of personal finance. “Unfortunately, our education system doesn’t provide us with all the skills,” says Gary Previts, a professor in the management school at Case Western Reserve University in Cleveland.

If you want to learn more, consider taking a course in personal financial planning at a community college, Previts advises. But always ask about the teacher’s institutional affiliations; many financial planners teach classes to drum up business, and some may not give objective information, because they’re beholden to their employers, and to their own sales quotas.

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