Latest news with #MikeShamrell
Time of India
7 hours ago
- Business
- Time of India
401(k) savings rate: Are Americans with 401(k) accounts saving enough for retirement? Fidelity's latest report has this to say
Americans are getting closer to retirement readiness A decade of progress Better employer matches help ADVERTISEMENT Auto-enrollment is making a difference Gen Z steps up ADVERTISEMENT FAQs ADVERTISEMENT After years of slow progress, Americans may finally be getting close to saving enough for retirement, or at least those with access to a 401(k) plan are, as per a Investment's latest retirement savings report revealed that in the first quarter of 2025, the average total 401(k) savings rate on its plans reached 14.3%, reported USA Today. That's an all-time high and just a step away from the long-recommended 15% benchmark many financial advisers suggest for a secure retirement, as per the years ago, the picture looked different, as in early 2015, employees were saving just 8.1% of their pre-tax income, while employers added 4.4%, for a total savings rate of 12.5%, according to USA Today. By comparison, today's employees are contributing 9.5%, with employers pitching in 4.8%, as per the President of Thought Leadership at Fidelity, Mike Shamrell said, 'It's basically the rate that we recommend that will allow you to live the same lifestyle in retirement that you did before you retired,' quoted USA reason for the increase is that employers are more generous with their matching contributions. As competition for talent grows, many companies now offer to match up to 5% of employee salaries, as per USA Today.A senior director of investing at Betterment, Mindy Yu said, 'That's basically free money for saving for retirement , and that is something that employees value,' as quoted in the policies are also having an impact as since the beginning of 2025, most new 401(k) plans are required to automatically enroll workers unless they opt out, as per USA Today. This simple change has encouraged more participation and is steadily improving savings habits, according to the than one-third of Fidelity's plans now auto-enroll workers at contribution rates of 5% or more, reported USA Today. Many plans also include auto-escalation features, which increase contributions gradually every year, and nearly three-quarters of Fidelity's plans now include this feature, reported USA Today.A head of thought leadership at Alight Solutions, Rob Austin said, 'Unless a new hire takes action, they're going to be saving for the plan,' adding, 'That's much different than how 401(k)s first started, and you had to enroll on your own,' as quoted in the data shows that Gen Z workers, though they are in the early phase of their careers, are saving at a promising rate of 11.2%, as per USA Today. That's close behind Millennials at 13.5% and Generation X at 15.4%, according to the said, 'I think most of the newer, younger cohorts are in this environment where they learn that they need to be saving a lot,' quoted USA advisers typically recommend saving at least 15% of your salary, including employer match for a secure automatically signs you up for a 401(k) when you start a job. It's helped more people start saving without needing to opt in.
Time of India
8 hours ago
- Business
- Time of India
Are Americans with 401(k) accounts saving enough for retirement? Fidelity's latest report has this to say
After years of slow progress, Americans may finally be getting close to saving enough for retirement, or at least those with access to a 401(k) plan are, as per a report. Americans are getting closer to retirement readiness Fidelity Investment's latest retirement savings report revealed that in the first quarter of 2025, the average total 401(k) savings rate on its plans reached 14.3%, reported USA Today. That's an all-time high and just a step away from the long-recommended 15% benchmark many financial advisers suggest for a secure retirement, as per the report. A decade of progress Ten years ago, the picture looked different, as in early 2015, employees were saving just 8.1% of their pre-tax income, while employers added 4.4%, for a total savings rate of 12.5%, according to USA Today. By comparison, today's employees are contributing 9.5%, with employers pitching in 4.8%, as per the report. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Air conditioners without external unit. (click to see prices) Air Condition | Search Ads Search Now Undo Vice President of Thought Leadership at Fidelity, Mike Shamrell said, 'It's basically the rate that we recommend that will allow you to live the same lifestyle in retirement that you did before you retired,' quoted USA Today. Better employer matches help One reason for the increase is that employers are more generous with their matching contributions. As competition for talent grows, many companies now offer to match up to 5% of employee salaries, as per USA Today. Live Events A senior director of investing at Betterment, Mindy Yu said, 'That's basically free money for saving for retirement , and that is something that employees value,' as quoted in the report. Auto-enrollment is making a difference Auto-enrollment policies are also having an impact as since the beginning of 2025, most new 401(k) plans are required to automatically enroll workers unless they opt out, as per USA Today. This simple change has encouraged more participation and is steadily improving savings habits, according to the report. More than one-third of Fidelity's plans now auto-enroll workers at contribution rates of 5% or more, reported USA Today. Many plans also include auto-escalation features, which increase contributions gradually every year, and nearly three-quarters of Fidelity's plans now include this feature, reported USA Today. A head of thought leadership at Alight Solutions, Rob Austin said, 'Unless a new hire takes action, they're going to be saving for the plan,' adding, 'That's much different than how 401(k)s first started, and you had to enroll on your own,' as quoted in the report. Gen Z steps up Fidelity's data shows that Gen Z workers, though they are in the early phase of their careers, are saving at a promising rate of 11.2%, as per USA Today. That's close behind Millennials at 13.5% and Generation X at 15.4%, according to the report. Austin said, 'I think most of the newer, younger cohorts are in this environment where they learn that they need to be saving a lot,' quoted USA Today. FAQs What's a good savings rate for my 401(k)? Financial advisers typically recommend saving at least 15% of your salary, including employer match for a secure retirement. What's auto-enrollment and why does it matter? Auto-enrollment automatically signs you up for a 401(k) when you start a job. It's helped more people start saving without needing to opt in.
Yahoo
2 days ago
- Business
- Yahoo
We're saving almost enough in our 401(k) retirement plans. Here's the magic number.
After years of fitful progress, Americans with 401(k) accounts are finally saving enough for retirement – almost. That's the takeaway from the latest retirement savings report from Fidelity, a leading plan manager. In the first three months of 2025, the total 401(k) savings rate on Fidelity plans reached 14.3%. That's an all-time high, and it approaches the 15% benchmark that many financial advisers set for optimal retirement savings. A decade ago, in the first quarter of 2015, employees contributed 8.1% of their pre-tax pay to 401(k) plans, according to Fidelity data. Employers kicked in 4.4% in matching contributions, for a total savings rate of 12.5%. In the first quarter of 2025, by contrast, employees saved 9.5% of their salaries, and employers matched 4.8%, for a total savings rate of 14.3%. Retirement planners recommend a 15% contribution rate to 401(k) plans on this theory: If you save at least that much throughout your working years, you'll have enough to live comfortably in retirement. 'It's basically the rate that we recommend that will allow you to live the same lifestyle in retirement that you did before you retired,' said Mike Shamrell, vice president of thought leadership at Fidelity Investments. The gradual ramp-up in 401(k) contribution rates reflects several positive trends in the retirement savings industry, Shamrell said. The 4.8% employer match is an all-time high. Employers increasingly offer to match at least 5% of a worker's pay in 401(k) contributions, as a way to attract and retain good employees. A common formula matches the first 3% of salary dollar for dollar, and 50 cents on the dollar for the next 2%. 'That's basically free money for saving for retirement, and that is something that employees value,' said Mindy Yu, senior director of investing at Betterment, the online investment manager. Another big trend to influence 401(k) contribution rates is auto-enrollment. Starting in 2025, most new 401(k) plans must automatically enroll employees, rather than leave the decision to workers. Many older 401(k) plans are voluntary, meaning that employees must sign up to participate. Under auto-enrollment, an employee who does nothing opts in. More than one-third of Fidelity plans now auto-enroll employees in 401(k)s at a contribution rate of 5% or higher. 'Unless a new hire takes action, they're going to be saving for the plan,' said Rob Austin, head of thought leadership at Alight Solutions, a human capital technology and services provider. 'That's much different than how 401(k)s first started, and you had to enroll on your own.' Another evolving feature allows employees to automatically increase 401(k) contributions from year to year. Nearly three-quarters of Fidelity plans now have an auto-escalation feature. Retirement plan contributions are rising at a moment when tax-advantaged retirement savings seems to be catching on in the American workplace. Half of all private-sector workers now participate in 401(k)-type plans, up from about two-fifths of employees in 2010, federal data shows. Some retirement experts see 50% participation as a retirement-savings tipping point. More private-sector Americans are participating in 401(k) plans, at least in part, because more employers are offering them. Between 2014 and 2024, employee access to 401(k)-style plans rose from 60% to 70%, according to the Bureau of Labor Statistics. Those positive signs are important, retirement experts say, because many Americans fail to save for retirement. The wealthiest Americans are the most likely to amass retirement savings. For households in the top 10% by income, the median retirement account held $559,000 in 2022, according to the federal Survey of Consumer Finances. An overwhelming 93% of those households held retirement accounts. For middle-income Americans, those in the 40th to 60th percentile by income, the median retirement plan held just $39,000, and nearly half of that group had no retirement accounts. Many smaller employers don't offer 401(k) plans. Nearly half of workers have no access to any retirement plan at work, according to an AARP analysis. Americans achieved a record rate of 401(k) savings at a time when their account balances were slipping. Average 401(k) balances fell by 3% from late 2024 through early 2025, to an average value of $127,100, Fidelity reports. The decline came during a span of market volatility as President Trump took office and launched a trade war. If 401(k) contribution rates continue to rise, investment experts say, one reason will be good savings habits among younger workers. The total 401(k) savings rate for Generation Z workers is 11.2%, Fidelity reports, not far behind the savings rates for Millennials (13.5%) and Generation X (15.4%). The savings rate for young adults is significant, because Gen Z is decades away from retirement. 'I think most of the newer, younger cohorts are in this environment where they learn that they need to be saving a lot,' Austin said. Younger workers know about the decline of pensions as a source of retirement income, and the possibility that Social Security will face a shortfall when they retire. 'Shortfall risk is very real,' Yu said. Younger workers are more likely than older workers to contribute to a Roth 401(k), Fidelity data shows. Those workers are effectively contributing at a higher rate, Austin said, because Roth contributions have already been taxed. This article originally appeared on USA TODAY: We're saving almost enough in our 401(k)s. Here's the magic number. Sign in to access your portfolio
USA Today
2 days ago
- Business
- USA Today
We're saving almost enough in our 401(k) retirement plans. Here's the magic number.
We're saving almost enough in our 401(k) retirement plans. Here's the magic number. Show Caption Hide Caption How are tariffs and your 401(k) retirement savings intertwined? Experts say a rise in tariffs can lead to several factors that impact your retirement savings. After years of fitful progress, Americans with 401(k) accounts are finally saving enough for retirement – almost. That's the takeaway from the latest retirement savings report from Fidelity, a leading plan manager. In the first three months of 2025, the total 401(k) savings rate on Fidelity plans reached 14.3%. That's an all-time high, and it approaches the 15% benchmark that many financial advisers set for optimal retirement savings. A decade ago, in the first quarter of 2015, employees contributed 8.1% of their pre-tax pay to 401(k) plans, according to Fidelity data. Employers kicked in 4.4% in matching contributions, for a total savings rate of 12.5%. In the first quarter of 2025, by contrast, employees saved 9.5% of their salaries, and employers matched 4.8%, for a total savings rate of 14.3%. How much should you contribute to a 401(k)? Retirement planners recommend a 15% contribution rate to 401(k) plans on this theory: If you save at least that much throughout your working years, you'll have enough to live comfortably in retirement. 'It's basically the rate that we recommend that will allow you to live the same lifestyle in retirement that you did before you retired,' said Mike Shamrell, vice president of thought leadership at Fidelity Investments. The gradual ramp-up in 401(k) contribution rates reflects several positive trends in the retirement savings industry, Shamrell said. The 4.8% employer match is an all-time high. Employers increasingly offer to match at least 5% of a worker's pay in 401(k) contributions, as a way to attract and retain good employees. A common formula matches the first 3% of salary dollar for dollar, and 50 cents on the dollar for the next 2%. 'That's basically free money for saving for retirement, and that is something that employees value,' said Mindy Yu, senior director of investing at Betterment, the online investment manager. Big 401(k) trends: Auto-enrollment, auto-escalation Another big trend to influence 401(k) contribution rates is auto-enrollment. Starting in 2025, most new 401(k) plans must automatically enroll employees, rather than leave the decision to workers. Many older 401(k) plans are voluntary, meaning that employees must sign up to participate. Under auto-enrollment, an employee who does nothing opts in. More than one-third of Fidelity plans now auto-enroll employees in 401(k)s at a contribution rate of 5% or higher. 'Unless a new hire takes action, they're going to be saving for the plan,' said Rob Austin, head of thought leadership at Alight Solutions, a human capital technology and services provider. 'That's much different than how 401(k)s first started, and you had to enroll on your own.' Another evolving feature allows employees to automatically increase 401(k) contributions from year to year. Nearly three-quarters of Fidelity plans now have an auto-escalation feature. Is retirement savings finally catching on? Retirement plan contributions are rising at a moment when tax-advantaged retirement savings seems to be catching on in the American workplace. Half of all private-sector workers now participate in 401(k)-type plans, up from about two-fifths of employees in 2010, federal data shows. Some retirement experts see 50% participation as a retirement-savings tipping point. More private-sector Americans are participating in 401(k) plans, at least in part, because more employers are offering them. Between 2014 and 2024, employee access to 401(k)-style plans rose from 60% to 70%, according to the Bureau of Labor Statistics. Those positive signs are important, retirement experts say, because many Americans fail to save for retirement. Wealthy workers amass more retirement savings The wealthiest Americans are the most likely to amass retirement savings. For households in the top 10% by income, the median retirement account held $559,000 in 2022, according to the federal Survey of Consumer Finances. An overwhelming 93% of those households held retirement accounts. For middle-income Americans, those in the 40th to 60th percentile by income, the median retirement plan held just $39,000, and nearly half of that group had no retirement accounts. Many smaller employers don't offer 401(k) plans. Nearly half of workers have no access to any retirement plan at work, according to an AARP analysis. Americans achieved a record rate of 401(k) savings at a time when their account balances were slipping. Average 401(k) balances fell by 3% from late 2024 through early 2025, to an average value of $127,100, Fidelity reports. The decline came during a span of market volatility as President Trump took office and launched a trade war. Gen Z has good retirement savings habits If 401(k) contribution rates continue to rise, investment experts say, one reason will be good savings habits among younger workers. The total 401(k) savings rate for Generation Z workers is 11.2%, Fidelity reports, not far behind the savings rates for Millennials (13.5%) and Generation X (15.4%). The savings rate for young adults is significant, because Gen Z is decades away from retirement. 'I think most of the newer, younger cohorts are in this environment where they learn that they need to be saving a lot,' Austin said. Younger workers know about the decline of pensions as a source of retirement income, and the possibility that Social Security will face a shortfall when they retire. 'Shortfall risk is very real,' Yu said. Younger workers are more likely than older workers to contribute to a Roth 401(k), Fidelity data shows. Those workers are effectively contributing at a higher rate, Austin said, because Roth contributions have already been taxed.
