Make it automatic
Workers across America are increasingly taking steps to boost their rate of savings, but employers are also making it easier. They understand that if savings is done automatically without the need for human intervention, employees are more apt to partake, which Fidelity's results proved true.
Of those that increased their savings during 2019, Fidelity found that 40% did it proactively, while 60% benefited from an automatic increase through a company-sponsored program.
Employers are taking several steps to automate retirement savings. Fidelity found they are increasingly enrolling new employees in company retirement plans automatically, and are doing it at a higher savings rate. Of the plans that enroll new employees automatically, 34% do it at a savings rate of 5% or more. Back in 2009, only 11.8% of companies were that bold.
The employers are also automatically increasing contributions for employees at a rising rate. In the fourth quarter of 2019, 19% of companies offered automatic contribution increases compared to 9% in 2009.
The automatic increase rate is currently capped at 10%, but with the passage of the SECURE Act, that soon increases. Signed into law in late December, the SECURE Act aims to make it easier to save for retirement by eliminating the maximum age for traditional IRA contributions, allowing part-time workers to participate in a 401(k) plan, and enabling companies to withdraw up to 15% of a worker's pay automatically into a savings account, among other things.
Stay in it to win it
Building a $1 million nest egg doesn't happen overnight. It takes time and patience. The longer you stay committed to saving for retirement, the more you'll amass.
At least, that's the case for Fidelity's 401(k) and IRA account holders. Those that remained in their 401(k) plan for 10 straight years saw their balances increase to record levels in the fourth quarter.
#financialadvisor #autogramtags #moneymatters #investments #creditgoals #buildingwealth #longterminvesting #investmentstrategies #debtrelief #indexfunds #wealthbuilding #financialindependence #personalfinance #finances #personalfinances #networth #billionaire