Financial Literacy Month reminds us of the importance of overall financial literacy, helping Americans build and maintain healthy financial habits. And whether you’re a seasoned pro or you’re just getting into the financial literacy game, there are a few overall wellness basics you’ll want to know—starting with budgeting, credit scores, and saving and investing.
401(k) plans allow workers to save more for retirement than any other retirement savings vehicle, and the opportunity to reach maximum retirement readiness is exciting, no? But the inner workings of 401(k) plans and the retirement industry in general are complicated, and a little bit of guidance is always needed when so many rules and regulations are put in place. So without further ado, here are five things you need to know if you’re saving in a 401(k) plan for the first time.
Saving more money is a top priority for millions of Americans, but getting ahead financially isn’t easy by any means. The sheer amount of information out there about personal finance can be overwhelming, and it’s easy to get lost navigating all of the various areas of personal finance. This America Saves Week, we’re cutting through the clutter to deliver five easy, actionable tips that can help you save more money in 2019.
Each New Year signifies new beginnings—a chance to start over and set yourself up for 365 days of success. We often use New Year’s as an opportunity to introduce better behaviors within our daily lives, setting resolutions to go to the gym more, build better interpersonal relationships, eat healthier, see our family more, and the like. But in 2019, there’s a new trend emerging among the most common New Year’s resolutions. Almost 9 in 10 Americans are planning on making some sort of financial resolution in the upcoming New Year.
It’s a million dollar question; one we could only wish came with a clear, cut-and-dry answer. How much do you need to have saved to enjoy the retirement you’ve always dreamed of? Experts suggest having anywhere from $1 million to $1.5 million saved for the golden years of your life, but when it comes to retirement planning, there’s no such thing as a one-size-fits-all solution—as nice as that might be.
The news was alarming; at year-end 2017, U.S. household debt rose to $13.15 trillion – an all-time high. The recent study showed that rising debt comes with a price – less money in your wallet, as well as a burden on your emotional and physical well-being. What’s even more alarming, perhaps, is that nearly four in five full-time American workers report living paycheck-to-paycheck. With rising health care and secondary education costs, it can be tough to find extra money in the budget to allocate towards saving for retirement. But most Americans don’t want to work forever, so saving for a financially-secure retirement should become a top priority.
If you thought that the Americans who are most concerned about retirement planning are the workers who are closest to reaching retirement age, you’re in for a surprise. Roughly 10,000 Baby Boomers reached full retirement age today (congrats, Baby Boomers – you made it!), and roughly 10,000 Baby Boomers will continue to turn 65 every day for the next 11-ish years. But they aren’t the generation that has the most anxiety about reaching retirement. Not by a long shot.
Enter Generation X.
If you’re a full-time American employee who feels the burden of financial stress or lives paycheck to paycheck, you’re not alone. Roughly 78 percent of full-time American workers say they live paycheck to paycheck, and that number has only gone up in recent years. Worrying you won’t have enough money to pay for unexpected expenses is stressful enough as it is, but how do you manage to save money for retirement while still providing for yourself in the now?
Suddenly finding yourself with a large chunk of money at your disposal sounds like a dream come true for many people, but receiving an inheritance without a plan for what to do with the funds can cause quite the pickle for young people. Many times, inheritances are viewed as a short-term financial gain that can be spent on frivolous items – never meant to last in the long-term. But if we’ve learned anything in our time in the financial industry, it’s that what lasts one week for some can last years for another.
Listen up, Millennials. If you have student loan debt, this one’s for you. Forbes recently reported that the average American household with student debt owes about $49,000. Yikes. With all of that college debt looming large, it’s no wonder Millennials have delayed traditional timeframes for buying houses and starting families. But it may also affect how – and when – Millennials begin saving for retirement. Should Millennials focus on paying back student loans as fast as possible, or should they allocate more dollars per paycheck to begin funding retirement? What makes the most sense?
There’s no escaping it – technology is everywhere you look. From the mini-computer you call a phone to the touchscreen on your new car’s dashboard, everything in our lives is becoming “smart.” And the financial industry is no different. Tablets and smart phones are changing the conversation and are helping retirement plan participants become educated in new ways that they never could have ten years ago. And it goes far beyond checking account balances on the go.
Hey Millennials – raise your hand if you’ve started a retirement savings account. If you have, you’re not alone. A recent study reported that when Millennials, characterized as being born between 1979 and 2000, were offered a 401(k) retirement savings plan through their employer, there was a 72 percent participation rate . Congratulations! As a group, you started saving around the age of 22, more than a decade earlier than your Baby Boomer parents and five years sooner than your Gen X cousins. And these four tips will help you stay on top of the whole savings thing even more.
There’s never a bad time to audit your retirement savings account and make sure there are no major discrepancies between the amount of time you’d like to be retired and the amount of time you can afford to be retired. Maybe you weren’t as vigilant about saving for your retirement as you should have been early on or maybe you recently decided to raise your savings goals. Whatever the reason, if you’re over the age of 50 and are further from being retirement ready than you’d like to be, catch-up contributions can help.
The workforce as we know it has evolved tremendously in a relatively short period of time – today’s employees enjoy benefits like paid holidays, vacation and sick time, 40-hour work weeks, and much more. And with the establishment of employee benefits like company pensions and 401(k) savings plans, our lives after we leave the workforce are evolving as well. As a nation, we have a lot to celebrate! With all of these positive changes and this forward momentum, how has the way we think about saving for retirement evolved?
Contributing to a 401(k) retirement plan comes with many benefits, so it’s no wonder that about 54 million American workers actively save in a 401(k) retirement plan. Across the nation, 401(k) accounts hold an estimated $5.3 trillion dollars in assets, and that number just keeps getting bigger. With so many people committed to saving for retirement, it’s no secret that there are certain tax advantages for contributing to a retirement account. But keep in mind, some of these benefits are obvious — while others are not.
If you smoke cigarettes in the United States, you are not alone. A recent survey estimates that 37.8 million American adults currently smoke cigarettes, with more than 16 million living with a smoking-related disease . And if you’re looking for one more reason to quit smoking this year, this may be the clincher. Taking the money you’d save by NOT buying another pack of cigarettes, and instead putting that into a 401(k) retirement savings account, can put you on the path to retirement readiness.
Whether they’re ruining the housing market by spending too much money on avocado toast or taking down department stores due to their love of online shopping, Millennials are no stranger to facing intense scrutiny. And while their “frivolous spending habits” may predict that the generation will face serious future challenges when it comes to reaching retirement, recent statistics from the Transamerica Center for Retirement Studies show that 72 percent of Millennials have already started saving for retirement – and many started doing so at the ripe age of 22. All that said, there a few ways Millennials can further prepare for retirement – even if it is decades down the road.
As humans, we often hold a special affinity in our hearts for things that make us feel special. Whether it be as simple as a barista who knows your usual order as soon as your enter the café or as advanced as an email reminder from your mechanic that your car will soon be due for an oil change, we like to have experiences that are custom to us as individuals. And why should that change when it comes to managing our finances?
If you’re trying to locate an old 401(k) plan from a previous job, you’re not alone. Not by a long shot. Roughly $850 million in plan assets owned by 33,000 employees are “orphaned” each year, held by a financial institution without an employer to oversee the plan. That’s a lot of money being left on the table; the good news is there are a variety of ways to find missing 401(k) funds.