Retirement saving has never been at the top of most peoples minds as they struggle through the daily grind of paying bills, keeping a roof over their heads, and feeding themselves and their families. As the baby boomer generation is nearing or has already reached retirement age many of the younger generation are realizing that there will not be adequate social safety nets in place to provide for them in old age. The current retirees have a solvent Social Security system as well as now mostly extinct pensions to get them through the golden years of retirement. Younger generations can not depend on either of these, so what are they doing to prepare for retirement?
Before the economy crumbled in late 2008 savings in general and retirement savings in particular were at low or record low levels. As people have readjusted their financial lives to deal with the new reality of lower pay, uncertain job futures, and a soon to be insolvent social security system, saving has become much more popular. While for many this does not include retirement saving because of current budget needs, many private companies nationwide are doing something to make sure the next generation of retirees will at least have something to support them during their retirement years.
Charles Schwab recently released a survey that indicates the number of employers offering automatic enrollment in a 401(k) retirement plan has sky rocketed. 38% of employers surveyed now have automatic enrollment that require a specific opt out by the employee. This is up nearly 7 fold compared to 2005 when the rate was only 5%. On the flip side, matching contributions by the employer are not as standard as they used to be. 69% of employers currently offer some match which is down from a high of 76% in 2006. While this is discouraging it is to be expected as usually the first thing that gets dropped when a company enters a rough period is the employer match on retirement accounts. While I don’t expect this number ever to reach 90% I do expect it to head back up as the economy improves and companies begin competing for the best candidates.
While forcing employees to do anything is not really the best way to go about retirement saving it will be effective. This is a good trend to see as it means more and more people are saving for retirement without even thinking about it. The contributions are taken out of the employees’ paycheck before they even get it. While it does lower the amount of take home pay during this particularly tough period it will pay off in the long run.
Readers, where do you stand on this issue? If you are against it, are you preparing for retirement on your own or are you just hoping for the best? And if you are for it how far do you think employers can take this concept? Can they automatically enroll you in health insurance, what about gym memberships?
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Sunday, November 6, 2011
Are You Being Forced to Save for Retirement?
5:09 AM
Andy
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