Retirement Wealth

Is your retirement program only doing half the job?

Your most valuable employees are also the most likely to be the farthest behind in planning for retirement, partially because of the recent market turmoil and partially because qualified plans (401(k), etc) as well as Social Security are by themselves inherently inadequate programs for executive retirement funding.

The Retirement Gap and Replacement Ratios

The chart below illustrates the retirement gap that executives today might expect from their Social Security and qualified plan benefits. As earnings increase, the shortfall increases. For example, a 45-year-old executive currently making $250,000 can expect qualified plan and Social Security benefits to provide roughly 43 percent of his/her final salary.

The chart below demonstrates the potential total shortfall as a dollar amount. For example, a 45-year old executive currently making $150,000 per year will need to generate approximately $133,000 annually from other sources to replace 100 percent of his/her salary.

It is difficult, if not impossible, for highly compensated executives to rely solely on qualified plans to generate the income required to bridge the gap and meet the desired retirement goal. Executives at higher income levels must turn to the other alternatives, such as personal savings plans, participation in non-qualified plans or a combination of both, to meet their post-retirement income needs.

At the Lowenberg Group we design plans for building executive and business owner wealth while optimizing qualified plans in order to balance the equation. Whether the goal is wealth accumulation, reward and retention of key talent, tax reduction, or simply to provide a balanced retirement benefit program, we can help.

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