Most people who save this way are happy about their financial futures
If you were ever unsure about how to have money in retirement, just listen to those who have it made.
A Wells Fargo/Gallup survey found that most people who have 401(k)s believe they are the best way to guarantee they have cash when they aren’t working anymore. Even more, work-sponsored accounts are not just important, they’re practically required if you want to save.
Retirement planning is rough and complicated, and most people don’t know how it works — even though it’s vital to having money in our golden years. Retirement is a worldwide problem and the more companies that take retirement options away from workers, the less prepared employees are financially when they are ready to retire.
“The 401(k) plan has evolved into the greatest savings and investment vehicle that Americans have today to steadily build a retirement nest egg,” says Fredrik Axsater, a Wells Fargo executive vice president. “Pre-tax savings has a direct impact on the level of savings that people achieve, and we have to recognize this as the country contemplates changes in tax policy. The employer-sponsored 401(k) is critical to allowing working people to save and invest over time.”
The Wells Fargo survey says most investors — 72 percent — are optimistic that they will be able to hit their long-term financial investment goals within the next five years. This is up 20 percentage points from the same survey five years ago.
While the vast majority of respondents admit that it’s important to have some sort of income while in retirement, the idea far exceeds the execution. Since most people have no idea how retirement plans work, they don’t take advantage of them even when they are offered to them through work. Most say they can’t afford to save in their work-sponsored 401(k)s, even when there is an employee match to encourage them. Since workers don’t have enough savviness to make the best decisions for their finances, they end up losing a lot of money that would otherwise go toward their retirement. Sadly, the younger they are, the worse off they’re going to be since millennials don’t even know what a 401(k) is.
Admittingly, Wells Fargo says we don’t get enough help to make crucial investment decisions that help us in our planning.
“Setting a retirement savings goal — even if it’s an estimate — is a critical step in the process of managing one’s retirement outcome, but it’s hard to do,” Axsater says. “It becomes even harder to try to estimate what one will harvest from savings each year of living in retirement. This is where our industry must come up with solutions that allow people to envision their savings needs and what that translates to in terms of annual draw down in retirement.”
The lack of help with setting goals and estimating how much we’ll need in retirement is hurting us. Most Americans want a monthly payment for the rest of their lives to ensure they would be able to live relatively comfortably in retirement, but aren’t sure how to make their retirement money last them forever. And forever is so relative, considering Americans are living longer lives and our money isn’t living as long as we are.
Meet the Author
Article last modified on July 10, 2018. Published by Debt.com, LLC . Mobile users may also access the AMP Version: The Best Way to Save For Retirement Is a 401(k), says Everyone Who Has a 401(k) - AMP.