Since the new Lehigh Retirement Plan launched in January, there has been a greater than 50 percent increase in staff and faculty who are voluntarily contributing to their own retirement savings. That means 64 percent of employees are now receiving a match from Lehigh on at least a portion of those savings.
For those who aren't yet contributing, we thought it might be helpful to learn a bit more about how Lehigh's matching incentive works. As you'll see, you don't have to "maximize the match," to still see a significant increase in your retirement nest egg.
In order to encourage everyone to take an active role in saving for retirement, Lehigh’s retirement plan now includes an incentive match. The rate of the match is ½ percent for every one percent contributed by the employee up to a certain limit. The limit will increase over the next four years in the following way:
- 2014: 3.0% employee contribution/1.5% match
- 2015: 4.0% employee contribution/2.0% match
- 2016: 5.0% employee contribution/2.5% match
- 2017 and beyond: 6.0% employee contribution/3.0% match
Every financial expert will tell you that in addition to your company’s retirement contribution and Social Security, you should be setting aside some of your own income for the future. The Lehigh match rewards you for taking on that responsibility.
The good news is, even if you don’t feel that you can maximize the match, you can still take advantage of the program. That’s because anything you contribute up to the limit will be matched at that ½ percent to 1 percent rate.
So, if you feel you can only put aside $20 per month of your own money, that’s okay. Lehigh will still match that with $10, which means you’re really putting aside $30 a month. Want to do 2 percent instead of 3 percent this year? No problem. Lehigh will match that 2 percent with an additional 1 percent and now you’ll be saving 3 percent.
And there’s more good news. You can change your contribution at any time by going online to your TIAA-CREF account. That means if you have a change in your financial circumstances and find yourself able to make a greater commitment, you can do it quickly and conveniently. The Lehigh match will then increase as well once the change is in place.
The Lehigh matching limit is not a limit on how much you can save. If you want to put aside more than the matching limit, feel free. Just be aware that Lehigh’s match will only go up to the limits described above.
Every year, the Internal Revenue Service (IRS) issues limits on the amount that a person may set aside in tax-advantaged retirement plans. This year that limit is $17,500 for most people under the age of 50. If you are over 50, you may be eligible to increase that upper limit by as much as $5,000. And remember that you can save your own money pre-tax or after tax in a ROTH account; or in some combination of the two.