Retirement Plan Contributions and Worker Confidence
We have repeatedly written about the importance of maximizing contributions to retirement savings plans, such as 401(k)s and IRAs, due to the benefits of tax deferral on retirement nest eggs. A recent survey conducted by the Employee Benefit Research Institute (EBRI) underscores this concept. In the survey, the EBRI found a connection between participation in retirement plans and workers' confidence in a comfortable retirement. As reviewed by Market Watch, whereas 22% of respondents to the survey were confident in their ability to attain a comfortable retirement, those workers that contribute to a retirement plan are more than twice as likely to be very confident. Surprisingly, however, approximately 28% of respondents indicated that they had less than $1,000 saved for retirement. The survey is worth a read as it is full of other interesting statistics regarding retirement savings patterns and the impact that saving has on worker confidence in their future financial lives.
The takeaway for us is that while many workers would clearly benefit both financially and psychologically from saving through retirement plans, too many Americans have not saved sufficiently to provide for a comfortable retirement and thus are less confident in their ability to meet their retirement goals. At RDM Capital, we help guide clients to an effective savings plan that will project to meet our clients' retirement goals in the future. While many workers recognize the need to save for retirement, and gain confidence in their futures when they participate in retirement plans, working with a trusted advisor can often make the difference between creating and adhering to a plan versus putting off the need to save until it is too late.