Twenty-seven percent of American workers say they are not at all confident about having enough money for a comfortable retirement, according to the Employee Benefit Research Institute’s 2011 Retirement Confidence Survey. The survey found that 56 percent of workers have less than $25,000 in savings and investments, and 29 percent have less than $1,000. Wherever you are on the retirement savings spectrum, the National Endowment for Financial Education® (NEFE®) says it’s never too late to get back on track with a plan.
Matching Funds Return
Many employers stopped offering matching funds during the recession, which prompted some employees to stop contributing, too. But in 2010, 66 percent of companies that sponsored a 401(k) plan offered a match—a 7 percent increase from the previous year, according to Deloitte’s 2010 401(k) Benchmarking Survey. Additionally, 55 percent of companies that previously had suspended matching contributions plan to reinstate them within the next 24 months.
Balance Savings Goals
When money is tight, many families feel forced to make a choice between saving for retirement and supporting their children. A 2010 Sallie Mae study found that American families with children who are likely to attend college rank saving for college as high a priority as putting away for retirement, with 20 percent of families naming saving for their kids’ education their top saving priority. According to a May 2011 survey commissioned by NEFE and conducted online by Harris Interactive, 59 percent of parents are providing, or have in the recent past provided, financial support to their non-student adult children ages 18 to 39 who are no longer in school. As a result, 7 percent say they have delayed retirement and 26 percent have taken on debt.
Every Little Bit Helps
Researchers at Dartmouth College and NEFE designed a study to motivate and inspire new, low-income, female employees to capitalize on their employer benefit programs. The study participants learned that saving even small amounts in a 401(k), whether or not you receive matching funds, will add up. For example, savings of just $25 per week in your 401(k) over 10 years will grow to nearly $20,000 (at an 8 percent rate of return). Over 20 years, your account would be close to $60,000. The program resulted in a 56 percent increase in retirement plan participation. Learn more about strategies for those who have started saving late with NEFE’s Guidebok to Help Late Savers Prepare for Retirement, found at www.smartaboutmoney.org/resourcelibrary.
