Controlling Your Future Savings

February 1, 2017, Department, by Barbara Tulipane, CAE

Barbara Tulipane 410

In this month’s issue of Parks & Recreation magazine, we tackle the impact of retirement and the economic forces shaping pensions and savings plans for park and recreation workers. This is an issue of great importance for anyone working in the park and recreation industry, whether they have worked in parks and recreation for just a short time or for an entire career.

The profile of the park and recreation worker’s employment benefits is changing rapidly. Thirty or 40 years ago, workers who entered the park and rec field were likely to stay there, oftentimes in the same agency for an entire career. While salaries may not have been competitive with the private sector, defined pension plans made a career in parks and recreation the gold standard. If you put in 30 years, you could expect to retire with predictable and secure benefits from a government pension.

I have often wondered, however, if the security of defined retirement plans in general stifles individual growth. If seeking professional growth opportunities means leaving an agency and/or municipality, individuals are not likely to pursue new employment if their pension benefits will be lost. The fear of losing retirement benefits also creates a risk-averse culture, where innovation isn’t encouraged because the consequences are so great. As more municipalities move away from defined benefit pension plans, and employees have less fear of changing jobs and expanding their horizons, I believe individuals will be free to seek agencies that welcome innovation and creativity, and in turn, these agencies will attract top talent.

Individual retirement accounts, such as 401(k), 403(b) and 457(b) plans, have a lot to be said for their benefits. They give the employee greater control of his or her future, and they are completely portable — if you take a new job, your retirement savings plan goes with you. You also have control of how your retirement savings are invested — you can take greater risks AND reap greater rewards.

It’s not all roses however, as early proponents and adopters of these plans are now advising individuals to save considerably more than the previously recommended 3 percent. Most experts now advise individuals to save a far greater proportion of their income for retirement — as much as 10 percent of their salary in addition to the employer’s contribution!

If defined contribution plans are going to work for us as a principal means of saving for retirement, we must be vocal in advocating for the following: salaries must rise to be commensurate with the private sector, mandatory plan contributions must be made by both the agency and the individual, reasonable caps must be placed on fund management fees and employees must be given better guidance on picking funds.

Whether you have a defined benefit plan, a defined contribution plan or a hybrid of both, your future depends on the steps you take today. Becoming knowledgeable about your options and taking control of your future savings is your greatest and most powerful retirement tool. You should expect more from the plans designed to help you save for retirement, but you must control your own destiny as well.

Barbara Tulipane, CAE, is NRPA's President and CEO