Retirements of old, in which individuals could look forward to living out their golden years on income from Social Security and pensions alone, are fast becoming a thing of the past. Nowadays, however, numerous obstacles make saving enough money for an assured, comfortable retirement more challenging than ever.
One of the biggest obstacles to retirement savings today is healthcare expenses and tax laws that are rapidly shifting. But there are also new investment options such as Sprint 401(k) plan that may help boost retirement savings.
401(k) plans allow employees to select among several investment funds when it comes to investing their money, including stocks and bonds, mutual funds, exchange-traded funds as well as alternative investments like real estate and gold.
Sprint offers what would be considered an extremely generous 401(k) plan, matching up to 3% of employee contributions and permitting workers to roll over any funds which have been in their plan for over 12 months.
Sprint’s 401(k) plan may contain features that may not be ideal for investors, such as its selection of target date funds that differ significantly from typical ones; such “do it for me” funds provide diversification with regard to when one should plan to retire by their namesake date.
Sprint 401(k) offers employees access to an investment brokerage window, which enables them to purchase virtually any investment available to them as if it were their personal account. While this feature may seem appealing, it can sometimes prove too overwhelming and confusing for employees who lack either knowledge or time to assess all available investments.
A lawsuit filed in May alleges that Sprint, now part of T-Mobile US Inc, has shortchanged some employees by using outdated mortality tables when calculating pension benefits. Furthermore, according to the suit, Sprint used improper calculations when transitioning single-life annuity payments into joint and survivor annuity payments for retirees opting for this option, using incorrect interest rates when discounting survivor annuity payment amounts.
Sprint and three former employees reached a class settlement agreement totaling $3.5 million that will increase monthly payments for 1,009 workers who selected pension packages that include post-death payments to their surviving spouses, which represents approximately 36 percent of retirees’ estimated damages, according to Bloomberg Law.
In particular, the lawsuit claims that Sprint’s formula uses an inaccurate life expectancy factor and interest rate to discount payments to survivors, with further allegations that a seven-year setback makes equations predict beneficiaries will live longer than actual age data suggests; further depressing payments to original retirees.