Sunday, November 20, 2005

Lack of Retirement Savings

I just received the quarterly magazine from Fidelity Investments. They had a nice article on retirement savings. Here's some interesting facts from the article:

(1) "The Fidelity Retirement Index indicates that younger adults (ages 25 to 40) are on track to replace an estimated 55% of projected retirement income when they retire - well below the suggested estimate of 85%."

(2) "The same group, on average, has saved just $9,000 toward retirement and contributes $92 a month toward their nest egg."

(3) "More than one in five (21%) have not yet started saving for retirement."

Scary facts, huh? I continue to see this first hand at work. The company has a decent 401K plan in which they will match up to 5% of your salary. Still, people are contributing much less to be eligible for the 100% match and some are simply not even participating. Talk about throwing away free money! These people aren't young either, they're in their late 40's to early 50's. If you haven't started saving by then; it's going to be a very tough uphill battle. Time is the most important factor in investing. Start early and let compounding do it's magic.

4 Comments:

At November 21, 2005, Blogger bored said...

Scary, indeed!

I'm not sure if its the culture of "instant gratification" or not.

5% ? Pretty impressive match!

But why anyone at your company wouldn't take a grab at 5% free money is beyond me.

The Bored Investor

 
At November 22, 2005, Blogger Belasarius said...

I saw the same thing at a company I worked at over 15 years ago. In that case, they matched 67 cents on the dollar up to a total of 10% of your salary (you put in 6 they matched 4).. I was amazed at the number of people who didn't contribute enough to get the entire match. So you see, this is nothing new and I suspect pretty common.

 
At November 24, 2005, Blogger Empty Spaces Inc. said...

Most people claim they can't put any money in because they can't afford it.

Even though I feel i'm barely making ends meet, i still put in a $150 a pay check towards my 401k. There's no matching, but its a tax saving. The $150 doesn't make a dent in my retirement account, but I'm hoping my success in my other investments will continue over the next 35 years.

 
At November 28, 2005, Blogger Loi Tran said...

Many people just don't really worry about their retirement until it is too late. The U.S savings rate is below 0% this year according to the Commerce Department. People are spending more than they earn.

 

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