Lincoln Financial Group is recommending that workers use the 2% reduction in Social Security tax as additional retirement savings. It joins the company of The Hartford and ING which have made similar recommendations.
“The Social Security tax relief gives employees a unique opportunity this year to increase contributions to their 401(k) plans without seeing any changes in take-home pay,” said Chuck Cornelio, president of defined contribution business at Lincoln Financial. “Employees are often cautious about increasing their contributions or even enrolling in a retirement plan because they feel that they just can’t afford it. This new tax break gives people a great opportunity to simply redirect the surplus to retirement savings before they spend it somewhere else.”
The Social Security tax has been reduced to 4.2% in 2011. It will return to 6.2% on Jan. 1, 2012.