January 20, 2020 – Forbes

The math behind retirement saving always made sense to me. The more you can sock away, the more your kitty compounds and the more you’ll have at retirement. With 401(k)s slowly improving, the math makes even more sense. More plans offer automatic withdrawals, employer matches and Roth options. I can’t tell you what the stock or bond markets will do this year, but I’m certain that the math behind saving will make even more sense this year — and in years to come.

So it doesn’t surprise me why more people are saving in their retirement plans. Here some recent findings from the annual Plan Sponsor Council of America (PSCA) survey:

• Savers socked away an average 7.7% of pay, up from 6.8% just two years earlier, according to PSCA.
• Nearly a quarter (23%) contributed to a Roth (if offered), up from 19.5% in 2017 and 18.1% in 2016 – an increase of nearly 30 percent in just three years. Nearly 70% of plans offer a Roth 401(k) option.
• A third of plan sponsors are recommending specific savings targets to employees – and for nearly half of those, it’s a number 10% or higher.
• The percentage of participants taking a hardship withdrawal dropped from 2.3% in 2017 to 1.8% of participants in 2018.
• Contributions rose last year to an average of 7.7% of pay, up from 7.1 percent in 2017 and 6.8 percent in 2016.
• With company contributions coming in at an average of 5.2% in 2018, the average combined savings rate is now at 12.9%, up from last year’s record finding of a combined savings rate of 12.2%.
• Why do higher savings rates matter? “A 35-year-old earning $60,000 a year would save an extra $85,500 by retirement age by increasing 401(k) contributions by just 1%,” according to a Fidelity Investments estimate. “A 45-year-old earning $70,000 a year would have an additional $43,000.”

  While I would like to see all employers offer and contribute to retirement plans — remember 401(k)-type plans are voluntary — these numbers are a step in the right direction. Automatic savings at higher contribution rates is the key to building a bigger nest egg over time.

This article was written by John F. Wasik from Forbes and was legally licensed by AdvisorStream through the NewsCred publisher network.

The information in this communication or any information within the Asset Strategy Advisors, LLC domain, and or any attachments to any AdvisorStream communication is strictly confidential and intended solely for the attention and use of the named recipient(s). If you are not the intended recipient, or person responsible for delivering this e-mail to the intended recipient, please immediately notify AdvisorStream at privacyofficer@advisorstream.com and destroy all copies of this e-mail. Any distribution, use or copying of this e-mail or the information it contains by other than an intended recipient is unauthorized. This information must not be disclosed to any person without the permission of AdvisorStream LTD. Please be aware that internet communications are subject to the risk of data corruption and other transmission errors. For information of extraordinary sensitivity, we recommend that our clients use an encrypted method when they communicate with us.

Disclaimer: Material is for informational purposes only and does not constitute an offer to buy or sell any product. Past performance and any forecasts are not indicative of future results. This material was prepared and views are those solely of the author and does not necessarily represent the views of the presenting party, nor their affiliates. Because investors situations and objectives vary this information is not intended to indicate suitability for any particular investor. Direct investment in an index is not possible. Asset Strategy is unaffiliated with third-party sites, cannot verify the accuracy of, nor assume responsibility for any content of linked third-party sites. The information available on third-party sites is for informational purposes only.All information provided is for educational purposes only. The material herein does not constitute an offer to sell nor is it a solicitation of an offer to purchase any security. Offers will only be made through a private placement memorandum to accredited investors (typically have a $1 million net worth excluding primary residence or $200,000 income individually/$300,000 jointly of the last three years), or through an offering circular to qualified investors, and where permitted by law. Investments in any security are not suitable for all investors. Investments in securities involve a high degree of risk and should only be considered by investors who can withstand the loss of their investment. Prospective investors should carefully review the “Risk Factors” section of any private placement memorandum or offering circular. Investors should perform their own investigations before considering any investment and consult with their own legal and tax advisors. Past pricing structures may not be indicative of future pricing and may not result in positive returns. Securities offered through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Advisory services offered through Asset Strategy Advisors, LLC (ASA), an SEC-registered investment adviser. Insurance services offered through Asset Strategy Financial Group. (ASFG). CIS, ASA, and ASFG are separate companies, all of whom are independent of Forbes.