In 2011, 30% of employers said that they were “very confident” that their employees would have a sufficient amount of assets in retirement. Was 2011 that long ago? I didn’t think so, but that number has plummeted. Currently, only 4% of employers have that confidence in their employees’ future according to Wall St. Cheat Sheet’s Dan Ritter. In the article, “Maximize Your 401k Benefits: The Best Way to Boost Retirement Savings,” Ritter offers four pieces of advice when it comes to making sure you have enough money saved for your retirement. When surveyed, 92% of people think that America is in a retirement crisis. The government agrees and Senator Tom Harkin has been working on a plan to help turn this crisis around.
His report last year, “The Retirement Crisis and a Plan to Solve It,” discusses traditional retirement financing as a stool with three legs. The first is a traditional pension plan, the second is Social Security, and the third consists of our personal savings. In the report, Harkin talks about how all three have been challenged in recent decades. There isn’t much we can do about the demise of workplace pensions and the uncertainty of Social Security in the future, but we do have control over our personal savings. By making responsible financial decisions and having the necessary knowledge to plan for our retirements, we can work to overcome America’s $6.6 trillion retirement deficit. You read that right, trillion.
Shop around for the best retirement plan options. What is called the go-shop period allows you to check the ethics of the company’s board of directors. You have to look out for your own best interest when it comes to your retirement plan. Remember that even the smallest purchases add up. Minimize account fees across all aspects of your finances. Each dollar spent on a quick coffee, beer, golf trip, or movie is money that you haven’t saved for your future. This isn’t to say that you shouldn’t do anything, but be mindful of all of the money that you spend. Ritter says to make sure that your current self takes care of and looks out for your future self.
Become educated on all of the financial terms and opportunities available to you. You can use the internet, free seminars or online classes and hire a financial professional when need be. The fourth tip in the article is to feed your 401k. If you have a plan at work, it is likely that your employer will match half of every dollar you contribute up to 6%. Try to maximize your contributions so you can take advantage of that free money from your employer. If you can’t max it out, contribute as much as you can. Be honest with yourself when deciding how much you truly can contribute. Stick to your budget and the rest should fall into place. Whether you transfer your 401k to an annuity or use it in another way in retirement, you will be glad to have prepared yourself with a great savings to carry your through life.
Written by Rachel Summit