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(Linda Stern is a freelance writer. Any opinions in the column are solely those of Ms. Stern. You can e-mail her at lindastern(at)aol.com.)  Finance Anyone clinging to the myth of corporate protection should give it up on news that both IBM and Verizon have frozen their traditional pensions, even for long-time workers, and even though both companies are financially fit. Still need convincing? What about the 60 percent increase in workers' share of health-care costs from 2001-2004 that Hewitt Associates reported? Or the shifting of 401k fees from company to worker? Or the dumping of retirees from health-care coverage? Oh sure, you owe your employer an honest day's work for an honest day's pay, and it's good to take pride in what you do. But it is foolish to expect long-term care from a corporation. Money in the bank is worth more than a company promise.
This is not bad news, it's simply the killing of a myth that has long existed and been dangerous to workers for generations. At their height, traditional pensions never did cover more than half of the workforce, according to Labor Department figures. Massive layoffs of earlier generations before they ever cashed in, coupled with pension raids, lead to pension protection laws in the first place. Now, at least, smart workers know the score and can set about to protect themselves. That is a very good thing. With tax incentives for saving your own money and insuring yourself, you are free to leave a job you don't like and find another. You can bargain for more money, spent your savings as you'd like, and protect yourself from corporate whim. You are more in control of your own future, and, like they tell you at high school graduation, that is a privilege as well as a responsibility. Here's how to become more self-reliant. -- Save and invest. Max out your 401(k) contributions, and any Individual Retirement Account or Roth IRA accounts that you are allowed under tax law. If you're getting a tax break for saving your own money for yourself, this is the first place your money should go. -- Take it now, not later. If you're stuck between a lump sum distribution and a monthly pension, take the lump sum and invest it for yourself. If you leave your job, take your 401(k) holdings with you. Roll them into an IRA that you control. -- Buy your own insurance. Company-provided life and disability insurance is usually inadequate to cover your needs. Figure out what you do need and buy it yourself, either at work or independently. -- Consider buying your own health-care policy. This doesn't work for everyone, as some workers still do have good plans that are subsidized at work. But if you buy high-deductible insurance while you're young and healthy, you should be able to hold it as long as you need insurance. Should someone in your family fall ill, you won't suffer job lock. If you get a plan that is qualified for a health-care savings account, you can shelter as much as $5,450 a year in a tax-free account for family coverage. -- Make yourself valuable. Read, network, take continuing education classes, learn new skills, and do whatever else it takes to stay important at work. Companies will always need skilled, talented and congenial employees, and they will pay well for them. -- Reduce your debts. If you're working for money you've already spent, you have very little leeway. -- Work for yourself. The best way to be self-reliant is to run your own business. This doesn't have to be a big company or even a full-time business. Even a side business opens up the world of additional tax breaks, savings opportunities and the kind of leverage that can keep you covered regardless of what the Fortune 500 decides to give its workers this week. link: http://news.yahoo.com/s/nm/20060114/bs_nm/column_finance_dc |
