Living in the shadow of the Baby Boomer and Gen X, the Millennials – those born after 1980 – somehow got the message about money.
According to a study conducted by Wells Fargo in 2014, the main reason may be the Great Recession of 2008. The study found, “a strong majority (80%), say it taught them they have to save “now” to survive economic problems down the road.” Good to know something good came out of that shared economic experience.
Our company just released a new study that finds regular people – like you and me – are walking away from “free money.” The numbers are fairly staggering, totaling 24 BILLION(!) dollars a year. What’s this free money I speak of? Your company 401(k) match – the money your company is willing to invest in your future.
Here’s the catch: they will only give it to you if you are willing to invest in your own future.
That means you need to start saving in your 401(k).
If your boss wanted to give you a $1,300 bonus on the spot, you’d take it, right?
A surprising number of Americans actually don’t. Many employees are offered that incentive in the form of a 401(k) match and for whatever reason, end up turning it down. Our new research report estimates that Americans are likely to leave a total of $24 billion in unclaimed 401(k) company matches on the table each year.
We arrived at this startling number by looking at the saving records of 4.4 million retirement plan participants at 553 companies. We found that one in four employees (25%) miss out on receiving their full company 401(k) match by not saving enough on their own. The typical employee who fails to receive the full match leaves $1,336 of potential “free money” on the table each year. For the average employee, that’s an extra 2.4% of missed annual income.
With compounding, this could amount to as much as $42,855 over 20 years!
Why do so many employees miss out on potentially receiving thousands of dollars every year?
Earlier this month, the U.S. Department of Labor issued its proposed rule to require individuals and firms offering retirement investment advice to serve as fiduciaries that are legally required to put the best interests of their clients ahead of their own.
Many people are not aware that a large number of financial advisers are not required to serve as fiduciaries, and may put their own interests first at the expense of their clients. Only fiduciaries are legally required by law to put their clients’ interests first.
Financial Engines strongly believes that Americans deserve a fair deal when it comes to investment advice.
The year began on a bright note, with continuing positive economic news in the U.S. driving up equity prices. Once again, the S&P 500 set new all-time highs during the quarter, finishing up 1.0% by the end of March. Smaller company stocks in the S&P Small Cap 600 index had another strong quarter gaining 4.0%.
Did you have a personal finance course in high school? College? Most people didn’t.
A recent RICP® Retirement Income Literacy Survey from The American College of Financial Services found that “just 20% of retirement-age Americans can pass a basic quiz on how to make their nest egg last through retirement.” That means four out of five American’s can’t pass the test. Uh oh.