As more "baby boomers" enter retirement, it is critical that retirees understand the impact withdrawal rates have on the longevity of their respective portfolios. Doing the appropriate planning today to avoid any surprises in the future is something that cannot be understated. For example*, Jon decided to retire with $500,000 in his retirement plan back in 1975:

• A withdrawal rate of 6% in 1975 would have lasted approximately 35 years.
• At a withdrawal rate of 7%, the portfolio would have run out of money before 1997.
• At a withdrawal rate of 8%, the portfolio would have run out of money before 1991.
• At a withdrawal rate of 9%, the portfolio would have run out of money before 1988.
• And at a withdrawal rate of 10%, Jon's money would last just over 10 years in retirement.

Even a small increase in the withdrawal rate can have a dramatic effect. Contact your Montgomery Retirement Plan Advisors plan consultant for more information or to discuss pre-retiree education seminars on this and related topics.

*For illustrative purposes only. Example shows the hypothetical performance of a portfolio from 1/1/1975 to 12/31/2009 given various withdrawal rates set at retirement. Hypothetical portfolio is comprised of 50% bonds and 50% stocks that is rebalanced annually. The yearly withdrawal amount is a fixed percentage of the initial amount of $500,000 and is then inflation adjusted over the period. Returns to stocks are represented by the S&P 500 total return, returns to bonds by the Barclays Aggregate Index total return, and inflation by the Consumer Price Index. Data Source: JPMorgan.

Survey Reveals Plan Sponsor Attitudes About Advisors

The 2010 Fidelity Investments Plan Sponsor Attitudes Survey, which included responses from 503 employers ranging in size from 25 to 2,500 participants, produced the following observations:

• The top three reasons for hiring an advisor include: 1) plan investment assistance, 2) improvement of plan performance, and 3) assistance with fiduciary concerns.
• More plans are utilizing the services of an independent investment advisor. Two years ago 69% (of plans coming to Fidelity) used an advisor and in 2010 that percentage increased to 82%.
• Advisor satisfaction is linked to sponsors' understanding of fiduciary responsibilities. Of the sponsors who indicated they were "certain" or "very certain" of their fiduciary obligations, 71% also indicated they were "very satisfied" with their advisor.
• 63% of plan sponsors said it was "important" or "very important" for advisors to take on a formal fiduciary role.

As your dedicated plan consultant, our primary value proposition is to help our clients navigate their fiduciary responsibilities in a documented, process-driven manner while enhancing investment opportunities for participants. We attribute this aspect of our service model to be a significant differentiator for us in the marketplace and key ingredient in the continued growth of our firm. To learn more about our how the Fiduciary Fitness Program™ educates and informs fiduciaries within a best-practices environment, please contact your MRPA plan consultant or email info@m-rpa.com.

Five Steps for Retirement Plan Success

At a recent virtual PLANADVISER National Conference, panelists identified five ways plan sponsors can re-focus their goals for plan significance and success.

1. Market Your Plan - Plan sponsors are becoming more paternalistic, and therefore reaching out more to help participants make informed decisions concerning their retirement. Plans sponsors should ask themselves: "Is the plan currently being marketed to participants as a valuable component of the company's employee benefits package? If not, how can we better promote the plan?"
2. Focus on Benefit Adequacy - Participants need to be educated to the realities of retirement planning. Oftentimes participants have expectations that are not entirely realistic, including the appropriate deferral percentage. Plan design can be a key element in dealing with this issue (i.e., automatic enrollment, automatic escalation features).
3. Understand Plan Costs - Plan costs should be readily available, transparent, and meaningful to both plan sponsors and plan participants. Pending final regulations are anticipated to play a major role in ensuring that this happens.
4. Evaluate Your Target Date Funds - Don't get too caught up with returns alone. Consider risk levels, glide paths, and equity/bond exposures before deciding on a target date fund series which best reflect the needs of your participant demographic.
5. Maximize Plan Design - What is the goal of this plan? Is it maximizing financially sound retirement experiences for participants? If so, what can you do in pursuit of this goal? Whatever the goal, plan design may be a key ingredient in achieving success (e.g., increase your match, shorten the eligibility period, or eliminate loan provisions).

Communication Corner: Making the Most of Your Retirement Plan

This month's sample employee memo looks at some common "Do's" and "Don'ts" when it comes to saving for retirement. Email info@m-rpa.com for a copy that you can print and distribute to employees.

News from MRPA

• MRPA Adds New Consultant
  David M. Montgomery has joined Montgomery Retirement Plan Advisors as Vice President. David Montgomery will be serving as a retirement plan consultant and is also responsible for expanding the firm's wealth management capabilities. He previously worked as an advisor for T. Rowe Price.


• Montgomery Speaks at Fiduciary Conference
  Mike Montgomery spoke at the fi360 Conference in San Antonio, Texas on May 5, 2011. His panel addressed the topic, "Multiple Employer Plans: An institutional-level fiduciary and administrative solution for the smaller end of the 401(k) market". fi360 is associated with the Foundation for Fiduciary Studies, which advances standards and practices for investment fiduciaries, and also sponsors the AIF® (Accredited Investment Fiduciary) and AIFA® designations.


• Multiple Employer Plan Article Wins fi360 Article Competition
  In the opening session of the 2011 fi360 Conference in San Antonio, Texas, fi360 CEO Blaine Aikin and AdvisorOne Wealth Editor-in-Chief Kate McBride announced Michael Montgomery as the winner of the fi360 Fiduciary Article Competition. Montgomery won the year-long competition with his article, "Multiple Employer Plans as a Fiduciary Risk Mitigation Tool." The article was subsequently published in AdvisorOne, an industry publication for financial advisors. To connect to the AdvisorOne report and the article, link to: www.advisorone.com/article/michael-montgomery-wins-fi360-fiduciary-article-competition.

This material is intended for informational purposes only and should not be construed as legal advice and is not intended to replace the advice of a qualified attorney, tax adviser, investment professional or insurance agent. Montgomery Retirement Plan Advisors does not warrant and is not responsible for errors or omissions in the content of this newsletter.

Securities and investment advisory services offered through Financial Telesis Inc. Member FINRA / SIPC. Montgomery Retirement Plan Advisors and Financial Telesis Inc. are not affiliated.