Just as the Financial Industry Regulatory Authority was urging workers on Tuesday to save more in their 401(k) plans in order to receive their full employer match, LIMRA Retirement Research said the same day that 40% of Americans 18 and older save nothing each month toward retirement.
The FINRA alert, “Why Leave Money on the Table—Make the Most of Your Employer’s 401(k) Match” encourages the 30% of American workers who are not contributing enough to their retirement plans to do so. FINRA notes that many employers match a worker’s 401(k) contributions, with one of the most common matches being a dollar-for-dollar match of up to 3% of the employee’s salary.
According to a recent study, FINRA said, nearly three in 10 workers (29.4%) do not contribute enough to their 401(k) to receive their full employer match. Younger workers are even more likely to leave money on the table, FINRA notes, with 43% of workers age 20-29 failing to contribute to the full extent of their employer’s match.
An earlier study showed that 40% of employees making less than $40,000 fall short of contributing the full extent of their employer’s match. Millions of workers, especially younger and lower income workers who need it most, are leaving money—free money—on the table, FINRA said.
Meanwhile, Matthew Drinkwater, associate managing director at LIMRA Retirement Research, said that a recent survey found that 40% of workers 18 years and older are not saving a dime toward retirement. “These findings are alarming,” he said. “Our research indicates that fewer future retirees will have pensions to pay for their living expenses and more will be relying on their personal savings to fund their retirement. Without a significant change in savings behavior, many Americans will not have enough money to afford to retire.”
The eNation survey, conducted on behalf of LIMRA in October, also found that 19% of adults not yet retired typically save less than $100 a month, while more than a quarter (27%) of consumers save $100 to $499 a month. Even those with household incomes of $50,000 or more, a sizeable proportion (42%) are either saving $100 or less, or nothing, each month.
Looking at pre-retirees, the results were not much better. Forty-one percent of pre-retirees are not putting aside any money for retirement and a little more than one-fifth (21%) of pre-retirees save less than $100 a month, the survey found.