Institute research looked at workers between the ages of 20 and 59 with household incomes of at least $50,000 and found that more than 70 percent are saving for retirement at work, outside of work, or both. For retirement savers it is not a “zero-sum game” where saving for one purpose means the exclusion of others. The most popular reasons for saving other than retirement include emergency funds, vacations, taxes, and education.
Institute research shows that 1 in 5 workers say they don’t contribute to their employer’s defined contribution plan because they have other savings priorities. Yet, new research indicates that those who are not saving for retirement tend not to save for other reasons, challenging the idea that retirement saving is “crowded out” by other financial goals.
America Saves Week (Feb. 22-26) is an annual effort to encourage non-savers to change by establishing a single savings goal.
Perhaps plan administrators and advisors can look to the America Saves Week model and encourage non-savers by incorporating auto enrollment, motivating younger workers to start saving now, and offering solid programs on financial literacy. Saving vehicles such as employer matches on 401(k) and 403(b) plans, the new MyRA accounts, Roth IRAs, and many others can only improve everyone’s ability to save.
America Saves Week is supported by LIMRA and more than 1,000 corporate, government and nonprofit groups.