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Normalize Retirement Savings Habits

Many American workers struggled financially before the COVID-19 pandemic. Therefore, it is not surprising that this crisis could greatly hinder their ability to reach their retirement income goals.

More than three-quarters of employees (77%) say they have been concerned about their financial well-being since the COVID-19 outbreak[1] and 82% will rely on their workplace retirement plan as a primary income source in their post-working years. That is, if they can get there — four in five employees expect to continue working for pay after “retiring.”[2]

In addition, many simply cannot afford to retire; the median household retirement savings is just $50,000.[3] That’s nowhere near the 60-80% replacement income financial experts say most people need to maintain their pre-retirement standard of living.

What does all this say about retirement readiness in America? More importantly, what can you do to help prepare for retirement?

An important aspect would be to understand the following benefits within your company’s retirement plan:

1. Does your company offer a contribution match? If the answer is yes, how much?

Are you contributing towards your retirement plan and benefiting from your company’s match or leaving money on the table? For example, if your salary is $50,000 and you contribute 3% per year, you would be saving $1,500 towards retirement. If your company matches deferrals up to 3%, they will also contribute $1,500. That is a total of $3,000 per year! Make sure you contribute at least the minimum amounts to maximize your employer match to avoid leaving money on the table.

2. Does your retirement plan offer automatic features?

Automatic features are a design tool for employees to elect a starting contribution percentage/amount and how to increase year after year. We know all too well life can become overwhelming and busy; why not make the process of investing for your future easier!

Now that you know a couple simple steps, it’s time to start planning for your financial future!

[1] National Endowment for Financial Education (NEFE)/Harris Poll Survey. April 2020. [2] Employee Benefit Research Institute (EBRI). “2019 Retirement Confidence Survey.” April 2019. [3] Transamerica Center for Retirement Studies. “19th Annual Transamerica Retirement Survey: A Compendium of Findings About U.S. Workers.” December 2019.

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