Fall 2019

Page 8



Compound INterest + STRATEGIC RETIREMENT PLAN DESIGN Albert Einstein once noted that the most powerful force in the universe is compound interest. In simple terms, compound interest means that you begin to earn interest on your income, resulting in your money growing at an ever-accelerating rate. In other words, if you save $300 each month and earn 10% in interest, you have $330. Then, if you earn 10% of interest on that, you end up with $363. And so on and so forth until you have a very hefty sum of money. After 35 years, saving $300 a month amounts to $126,000 in principal but because of compounding interest, your account balance will have grown to over one million dollars! All thanks to the most powerful force in the universe.

"Compounding interest is the 8th wonder of the world. He who understands it... earns it. He who doesn't ... pays it." - Albert Einstein

CLIENT SUCCESS STORY A manufacturing company with a diverse workforce was struggling to get employees involved in their retirement success and came to HORAN for help. HORAN collaborated with this employer to assemble a multifaceted retirement plan strategy with on-site education and automatic plan features that would instill better saving philosophies for their 120+ employees.

EMPLOYEE PARTICIPATION Increased to 90+% participation in 18 months


AUTOMATIC FEATURES Auto-Enrollment, Auto-Increase, Safe-Harbor for Employer Match


RETIREMENT READINESS Total plan asset balance increased by 15% in 18 months

IN CONCLUSION... Your employees' retirement readiness can be greatly impacted by the power of compounding interest and getting people engaged early through strategic plan design. Employees who are automatically enrolled in the plan will start saving earlier which leads to a longer timeline of savings and, therefore, a higher amount of savings available at retirement. By incorporating automatic features into your retirement plan design and educating on the importance of saving, you can help your employees be prepared for a successful retirement.