Americans aren’t saving enough for retirement. Recent studies show that Two-thirds of all Americans don’t contribute anything to a 401(k) or other retirement account available through their employer. Millions of people aren’t saving, because either they don’t have access to a plan, or just can’t spare the cash. It doesn’t help that the information on how to participate is stuck in the middle of a large stack of new employee paperwork that gets set aside permanently.There is also very little investment advice offered, and most participants choose funds without a solid understanding of the investments or the process.

What’s also concerning is only 14% of Employers in America offer plans at all. Prior to this recent study, it was widely thought that nearly 40% of private sector employers offered some retirement savings plan. An evaluation of tax records uncovered this much larger problem. Bigger companies are the likeliest to offer 401(k) plans, and since they employ more people than small firms, the overall number of U.S. workers who have the option are skewed. Because these companies employ the vast majority of Americans, it’s estimated that 79% of Americans work at a company with a sponsored retirement plan. That’s the good news. The bad news is that just 41% of those workers are making contributions. That combined result equates to 32% of American workers saving via a workplace retirement account.
Although lawmakers and states have proposed a variety of ways to get more people to save, they face serious pushback from Congress and the Financial Industry. Retirement is an important goal, but many Americans seem to have more pressing financial concerns.

For those people who are participating, their employer sponsored retirement account will be their largest asset at retirement, yet many of their co-workers aren’t signing up. If you find yourself in that boat, here are a few tips for taking advantage of your retirement benefits:

  1. As early as you are eligible, sign up for your company’s 401(k)!
  2. Create a deferral strategy. If you aren’t sure what to contribute, at least defer the maximum match that your employer offers. Please take advantage of this free money.
  3. Look for low-cost, diversified mutual funds. Target-date funds are a simple answer on how to allocate your portfolio. If needed, hire an investment manager to advise you on your 401k.

At Park + Elm, we help our clients develop an investment strategy that incorporates their entire financial picture. Creating an allocation and deferral strategy in your 401(k) that compliments the rest of your portfolio is crucial to your financial future. Additionally, if you are self-employed and do not have access to a 401(k) plan, there are affordable retirement solutions for you. If you’d like to start a discussion about your deferral and allocation strategy, please feel free to call us at 855.PARKELM!