Top 10 Tips to Maximize Workplace Savings Opportunities

BOSTON, September 29, 2004 -- In its annual study on the state of 401(k) plans, Fidelity Investments today reported that millions of plan participants who stayed the course during difficult stock markets in recent years were rewarded last year with higher account balances as the weighted average 401(k) rose to $55,000, a 25 percent increase over 2002.

The fifth edition of Fidelity's Building Futures report also revealed that workplace retirement savers continued to contribute to their 401(k) plans at a high level, consistent with prior years, as the majority deferred approximately seven percent of their wages in 2003. Additionally, more than one in 10 employees contributed the $12,000 maximum. The report is based on a comprehensive analysis of 2003 data for eight million participants in more than 10,000 plans serviced by Fidelity Institutional Retirement Services Company and will be available in the coming weeks online at http://buildingfutures.fidelity.com.

"Overall, the trends in Building Futures reinforce that 401(k)s are meeting their intended goal of helping workers save for retirement through the workplace," said Steve Deschenes, executive vice president, Fidelity Institutional Retirement Services Company, the nation's largest provider of 401(k) plans. "Average account balances increased significantly in 2003 and workers continued their steady contribution levels, two important indicators that 401(k) plans remain the preferred way to save for retirement."

Although American workers continue to recognize the value of their 401(k) plans in reaching their retirement savings goals, they could take greater advantage of a broader array of their workplace savings opportunities. Following are 10 tips employees should consider to maximize their retirement savings potential:

1. Enroll in the Plan. While approximately two-thirds of eligible workers are enrolled in their workplace retirement savings plan, one-third has yet to sign-up. Employers have made enrolling easier than ever before with in-person, phone and online enrollment options available. In addition, automatic enrollment programs are also helping employees to immediately get started on their retirement savings goals.

2. Contribute the Max. While more than one in 10 participants deferred the IRS pre-tax maximum of $12,000 to their workplace savings plan, many may be missing out on savings opportunities that can help them reach their long-term retirement goals.

3. Catch-up on Savings. Since the Economic Growth and Tax Relief and Reconciliation Act (EGTRRA) was enacted in 2001, eligible workers age 50 and older have the opportunity to contribute an additional $3,000 to their workplace retirement plan for 2004 and an extra $4,000 in 2005 if their plan allows.

4. Get Your Employer' Match. Although 69 percent of employers offer a company match covering 80 percent of workers, many workers do not contribute enough to their 401(k) to qualify for the match. Workers who are unable to contribute the maximum to their 401(k) should consider deferring at least enough to take advantage of an employer's matching contribution, if one is offered.

5. Use Automatic Increases. Many plan sponsors now offer programs for participants to automatically increase their 401(k) contributions. Workers can automatically increase contributions each year to keep long-term savings on track and reduce current taxable income.

6. Diversify Holdings. With 25 percent of participants invested in just one investment option, in many cases a money market or stable value fund, it may be better for them to diversify their portfolio to help maximize investing potential and minimize losses. Many employers are helping by offering programs that automatically rebalance employees' holdings annually with the ideal mix of stock, bond and cash investments. It is important to note that diversification does not ensure a profit or guarantee against loss.

7. Set it and Forget it. Employees who do not have the time or the inclination to manage their 401(k) plan assets may want to consider investing workplace savings in a life-cycle fund. Contributions are invested on a pre-determined schedule that becomes more conservative as the target retirement date approaches. Many employers currently offer these funds as a default investment option.

8. Take Money With You. Half of Americans¹ in their prime savings years maintain three or more retirement accounts, most likely forgotten IRAs or 401(k)s from former employers. Employees should consider taking a holistic view of all of their workplace assets and consolidating 401(k) plans from previous employers within their current plan.

9. Use Tools and Services. Many employers provide guidance-based tools and services to help workers better prepare for retirement. Online planning tools such as Fidelity Portfolio Planner and Retirement Income Planner help workers set strategies to reach their personal retirement goals. Portfolio management services -- such as Fidelity Retirement Plan Manager -- provide professional guidance to workers who want assistance managing and rebalancing their accounts on an ongoing basis.

10. Prepare for Life After Work. Employees need to prepare now for the financial complexities that will result when they stop receiving a paycheck. Employers provide tools that can help workers plan to manage the number of income sources in retirement including their assets in 401(k) plans and pensions, as well as Social Security income and personal investments.

"Our data and experience show that while participants are taking advantage of opportunities to build their retirement savings, there is not a single solution that meets the differing individual needs of all workers," said Deschenes. "Employers are responding by offering robust plan features such as investment tools, service options and communications and education programs that meet the diverse needs of their workers. Employees should take advantage of every opportunity their plan offers to help them increase savings and better position themselves for stronger long-term results."

About Fidelity Employer Services Company

Fidelity Employer Services Company provides benefits and human resources administration, workforce effectiveness, payroll solutions and stock plan services to over 18 million employees in the U.S. as of July 31, 2004. Additionally, through its HR Access acquisition, Fidelity provides HR and payroll applications for about 12 million employees in Europe.

Fidelity Investments

Fidelity Investments is one of the world's largest providers of financial services, with custodied assets of $1.9 trillion, including managed assets of $1.0 trillion as of July 31, 2004. Fidelity offers investment management, retirement planning, brokerage, human resources and benefits outsourcing services to 21 million individuals and institutions as well as through 5,500 financial intermediaries. The firm is the largest mutual fund company in the United States, the No. 1 provider of workplace retirement savings plans, one of the largest mutual fund supermarkets and a leading online brokerage firm. For more information about Fidelity Investments, visit www.Fidelity.com.

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Past performance is no guarantee of future results.

Fidelity Employer Services Company LLC

Defined contribution products and services are offered by Fidelity Investments Institutional Services Company, Inc., 82 Devonshire Street, Boston, MA 02109

¹ Fidelity estimates based on internal market research.