SPRING 2015
THE ONE PAGE MAGAZINE
ESOPs Outperformed The S&P 500
Private employee stock ownership retirement plans (ESOPs) outperformed the S&P 500 total return
index in terms of total return per participant by 62% from 2002 to 20112, according to a study
by Ernst & Young (EY). Research by EY’s quantitative economics and statistics (QUEST) practice
reveals the total return for an average S corporation ESOP participant over the past decade was
$99,000 implying an 11.5% compound annual growth. “S ESOPs are a model for how to make
retirement security a reality for the broad American middle class” said Steve Smith, EmployeeOwned S Corporation of America (ESCA) chairman, he is also VP of the General Counsel of
Amsted Industries. — PlanSponsor.com
The Younger Generation
Forty-nine percent of Americans younger
than 30 do not feel in control of determining
their retirement date. Among the same group
thirty-one percent said their retirement date is
“not at all” in their control. Fifty-five percent
of Americans under 30 feel not saving enough
could be the greatest setback on their path to
retirement. Sixty-nine percent anticipate living 15
years in retirement; however twenty-six percent
of those younger than 30 anticipate living 30
years or longer in retirement. This data is from
COUNTRY Financial Security Index and was
compiled by GfK, an independent research
firm that compiled the data from a survey
of approximately 1,000 U.S. adults. —www.
countryfinancialsecurityblog.com
HSA Recap
Health Savings Accounts (HSAs) held $24.2
billion in assets as of December 31, 2014. This is
an increase of 25% in HSA assets from December
31, 2013. During 2014 new health plans were
the leading driver of new HSA account growth,
accounting for 35% of new accounts. The average
balance of an HSA account holder is $12,995. These
accounts achieved an average annualized return
of 12.5% over the last three years. In 2014, $19.4
billion was contributed to HSA accounts, while
$13.2 billion was withdrawn, leaving $6.2 billion
carried forward into 2015. Employee Benefits
Research Institue (EBRI) found that about 15% of
the U.S. working population is enrolled in some
form of Consumer-driven health plans (CDHPs)
in 2014, representing about 26 million individuals
with private insurance. The percentage of workers
with an HRA or HSA-eligible health plan whose
employers contributed to the account had steadily
increased since 2009 and reached its highest level
of 71% in 2013 and fell slightly to 67% in 2014.
— PlanSponsor.com
6 | SPRING 2015
Health Care Costs in
Retirement
Affluent May Need More
Savings Than Retirement
Plan
According to this study affluent Americans on
average will need to save at least $2.5 million
before they retire. When asked if they were making
progress on this challenging goal, almost four
in 10 (38%) said they were “not doing well” or
only doing “somewhat well.” Legg Mason found
that its sample had an average retirement plan
savings of $385,000 and is close to age 58. Seventy
percent of respondents said they had a defined
contribution (DC) plan holding substantial
portions of their net savings. — PlanSponsor.com
Average expected retirement health care costs for
Medicare B, D and Supplemental insurance for a
healthy couple retiring this year at age 65 will be
$266,589 in today’s dollars. For a couple retiring
in 10 years at 65, expect costs will rise to $320,996.
However, when you add in dental, vision, hearing,
co-pays, and all other out-of-pocket costs, total
health care costs are approximately $394,954 for
a couple retiring this year at age 65. For a 55year old couple retiring in 10 years, total lifetime
health care costs are expected to be $463,849.
Health care costs are expected to increase yearover-year by approximately 6.5% (not including
the cost of long-term care services). The report
was constructed by HealthView Services that
looked at year-end 2014 health care cost data
from 50 million cases. HealthView Services is a
provider of retirement health care cost data and
Medicare, Social Security, and long-term care
retirement planning tools for financial advisers
and individuals.— PlanSponsor.com
Ameriprise Suit on 401(k) Fees Is Settled
Ameriprise Financial agreed to pay $27.5 million to settle a lawsuit which claimed the company
breached its fiduciary duty to 24,000 current and former employees who participate in its 401(k)
retirement-savings plan. As part of the settlement, Ameriprise agreed to put its plan’s recordkeeping functions out for bidding and to pay a flat or per-participant fee for such services. It also
agreed to certain fee disclosures and to seek the lowest-cost investment options.