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The twist is this: The bad news is only a fraction of the people will be able to save $4.3 million for retirement because the average salary is too low. The good news is most people won’t need to save $4.3 million because, thanks to living on a low average salary, they are accustomed to spending far less.
It might suit 401k plan sponsors and fiduciaries to tell this story of the generations to help the next generation avoid the mistakes of past generations. This tale provides many good tips about the dangers of investing in extremes, be they too conservative or too aggressive.
More sophisticated plan participants who can afford to hire their own adviser. They don’t ask more from the plan. They ask for less, in hopes of gaining more control over their own destiny. For a variety of reasons, this isn’t as easy as some participants would like it to be.
The bottom-line is employees may be setting themselves up not only for failure, but for a costly failure. This is why it’s vitally important for employees to understand more than just the simple objective and class of the mutual funds they own.
The financial decisions people make can reaffirm their perceived reality. A tweak here and there can change that reality.
Think about it. Newborn babies keep their parents up all night. Knowing your adult child has a sizeable nest egg means being able to sleep soundly. And chances are you’ll spend your waking hours with less stress, too. Teaching your children to save early for retirement can achieve this healthy (and wealthy) goal. There’s no reason why financial professionals should be the only parents who know this little secret.
If you are an active member of the gig economy, you don’t need to wait for Congress to act to start saving for retirement. You can begin saving right now. And, depending on your specific situation, you may just be able to save faster than you think.
Economic concepts can lay dormant for extended periods of time, but they never truly disappear. This is why it pays to know people who are older than you and have actually lived through one (or more) economic cycles.
Top 5 FiduciaryNews.com Stories in 2019 for the 401k Plan Sponsor and Fiduciary
The articles that caught the greatest interest may indicate not only answers people seek but future directions they intend to go. Let’s take a look.