The Parhams, who work in food services in the East Campus Marketplace, know their dream will only be possible if they save now.

Concerns about funding retirement are on the minds of many. A 2007 Gallup poll reported that the biggest financial worry for the majority of Americans, 56 percent, is having enough money to maintain their standard of living in retirement. A recent Duke Today online poll reflected a similar concern. The unofficial poll of 143 faculty and staff indicated that 59 percent are worried they may not have enough saved to live comfortably in retirement.

Dwight and LaShosta have 25 and 35 years respectively to go until reaching full retirement age. The question for them and others is: Will they be financially ready?

Options at Duke

Like the Parhams, Duke’s hourly paid staff members are automatically enrolled in the Employees’ Retirement Plan, a traditional pension plan paid entirely by Duke.

“I think it’s a good program that Duke is putting money into the plan, and we don’t have to worry about it,” said LaShosta, 33.

Hourly paid staff can also contribute to their retirement through the Duke Savings for Retirement Plan, which allows them to invest additional personal savings into a 403(b) plan. It’s funded by their voluntary, pre-tax deductions.

Salaried faculty and staff are eligible for the Faculty and Staff Retirement Plan, a 403(b), and are not eligible for the Employees’ Retirement Plan. To receive retirement contributions from Duke, most faculty and staff have to contribute at least 3 percent of their salary. Those under 35 years of age can receive the Duke contribution for as little as 1 percent.

The plan provides a similar benefit to Duke’s pension plan for hourly paid staff. With money like this available, most eagerly accept. Nearly 90 percent of those eligible to receive the Duke contribution participate in the plan.

“I jumped in right away to take advantage of the miracle of compounding interest,” said Steve Williams, a monthly-paid marketing specialist for Duke’s Office of Information Technology. “A year later I started receiving Duke’s contribution, which I value enormously.”

At age 56, Williams has worked at Duke seven years, and barring any major economic downturns, he said he and his wife are on target to reach their retirement goals. “Duke’s contribution is generous, especially the longer you stay. As your salary rises, so does Duke’s contribution,” he said.

This year, Duke contributes 8.6 percent on the first $51,450 of salary and 13.3 percent on salary in excess of $51,450 to those enrolled in the faculty and staff retirement plan.

Duke’s retirement plans are among the most competitive anywhere, said Sylvester Hackney, associate director of Duke Benefits. Last year, Duke’s contribution to retirement plans exceeded $81 million – more than the combined cost to build the Nasher Museum of Art and Bostock Library.

Duke’s retirement benefits look even better considering recent trends. Many companies have eliminated pension plans or minimized commitments to retirement benefits because of the long-term financial obligation, said John Graham, finance professor at Duke’s Fuqua School of Business.

“Retirement benefits are not something that most companies are beefing up,” Graham said. “Duke should be proud of its pension plan. It says that Duke cares about its employees.”

Saving Can Be Tough

Hackney said contributing to the 403(b) plans is an important part of what he calls a three-pronged approach, with personal savings, employer-provided retirement contributions and Social Security making up retirement savings. “All these funds are important when planning for retirement,” he said.

Hackney recommends increasing retirement savings after a raise – saving even 1 percent more will help.

“Save as much as you can. The future is so uncertain, especially in terms of health care costs and Social Security,” said Hackney.

According to financial experts, individuals will need between 75 and 85 percent of their pre-retirement income to maintain the same standard of living during retirement.

But for many, saving is easier said than done, said Dan Ariely, a behavioral economist and visiting professor at the Fuqua School of Business.

“It’s really hard to save,” he said. “If you want to save, first you need to take control of your spending.”

Ariely, who explores this concept in his book, Predictably Irrational, said spending is an emotional and often pleasurable experience – dining out, buying a new TV or car makes us feel good. He suggests using automatic deduction to pull money from checking and into retirement savings accounts. After all, if the money’s not there, it can’t be spent.

The Parhams, who are also new homeowners, know saving for retirement can sometimes be a challenge.

About four years ago, LaShosta signed up for the Savings for Retirement Plan on her own, after a financial advisor from AIG VALIC – one of Duke’s retirement plan investment carriers – spoke in dining services.

“I was only in it for about six months,” LaShosta said. “I closed the account because I needed the money for other things. Now, we think about whether we really need something or not before we buy it.”

Based on Human Resources’ data, most faculty and staff at Duke are doing well in preparing for retirement. About 85 percent of faculty and staff eligible for Duke’s retirement plans are currently on track for meeting the 75 percent pre-retirement income goal based on Duke provided retirement, Social Security and personal savings.

The Golden Years

Donnie Clark, who retired at age 65 after 45 years of Duke service, counts himself among those on track.

He was well prepared for a comfortable retirement because he participated in the pension plan and also contributed to the Savings for Retirement Plan for hourly-paid staff.

“I gradually kept putting money away,” said Clark, 72, who began working at Duke in 1956 in a telecommunications position.

“It was never that much, but after so long, it added up.”

Clark plays golf at the Occoneechee Golf Club four times a week. He has a beach house in Beaufort, where he enjoys spending time with his family, including three sons, two of whom work at Duke.

“There’s something to do all the time – work in the garden, fix the house, church activities – yeah, I’m enjoying life,” he said.

The Parhams are also taking steps to save on their own. About four years ago, they started putting away $25 to $150 per paycheck toward retirement. They’re also considering signing up for Duke’s Savings for Retirement Plan.

“We’re saving on our own, so we’re doing pretty well, I think,” Dwight said. “We’re also setting money aside for our two kids to go to college.”

Dwight took another look at the couple’s budget, and he and LaShosta met with Duke Benefits in March to see if they could save more.

After meeting with Hackney to discuss their options, the Parhams enrolled in the Duke Savings for Retirement Plan, a voluntary plan to boost their savings and reach their retirement dreams.

Five Retirement Strategies

1. Know your retirement needs. Experts estimate you’ll need at least 75 percent of your income in retirement to maintain your current standard of living.

2. Participate in a Duke retirement plan. It’s never too late to start saving. Retirement savings plans for bi-weekly and monthly staff are available. Talk with a Duke retirement counselor about which one is right for you, and make saving a priority. The sooner you begin contributing on a pre-tax basis, the more time your money has to grow. Investing even a minimal amount makes a difference. Call (919) 684-5600 or visit www.hr.duke.edu/benefits/retirement.

3. Beef up your savings. Remember to evaluate your contribution amount annually, so you can adjust for life’s changes. Incremental increases add up exponentially over time in your tax-deferred plan.

4. Research your Social Security benefits. Most people think that age 65 is when they can start receiving their full Social Security benefits, and they plan to work until that age. However, if you were born after 1938, you may need to work past age 65 to receive full benefits. For instance, if you were born in 1965, your retirement age is actually 67. If you still want to retire at 65, you need to contribute more to your retirement plan or savings account now. Visit www.ssa.gov/retirement.

5. Don’t touch it. Once you’ve opened a retirement savings account, sign up for direct deposit so you can invest in it and then forget it. Don’t dip into it to buy a new car, pay off credit cards, or take a dream vacation. Drawing on your retirement savings early can cause you to lose principal and interest, as well as tax benefits.