As the Indianapolis Colts head to Jacksonville tonight for a rematch of the only game the Jaguars have won this season, Legg Mason is encouraging all American workers —  NFL fans or no —  to hear a football-themed retirement strategy that could have defined contribution plan participants in good shape to retire the way they’d like.  

Legg Mason’s strategy is called First & Ten: First, get employees to enroll in their DC plan, and then encourage them to kick in at least 10% of their annual salary. Ten percent might sound like a prohibitively large chunk, Legg Mason acknowledges, but the DC savings could be substantial in careers’ fourth quarters.

“The saving crisis in this country is enormous and will only get worse unless employers and employees work together to solve it,” says Joseph J. Masterson, senior vice president of Diversified and a member of the Legg Mason Retirement Advisory Council. “For employers, that’s offering a defined contribution plan with a match that encourages employee participation, and for employees, it means saving more — saving at least 10%.”

The LMRAC says that if a 25-year-old worker with no other retirement savings and an annual salary of $30,000 implements First & Ten today with a DC plan that achieves a 6.6% annual pre-tax rate, by the time she’s 67, she would have saved more than $1,254,000.

By contrast, if that same worker puts 10% of her annual savings into a taxable brokerage account with a 5% post-tax return (roughly equivalent to 6.6% pre-tax), the total would only have reached $604,814 by age 67.

“First & Ten is a clever way to get the attention of employees and show them how much better off they could be in retirement if they start saving 10% in a defined contribution plan now — during football season,” Masterson says. “In football terms, this is a smart, grind-it-out strategy that wins in the end. Because when it comes to retirement, there's no last-second Hail Mary pass.”

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