With 401(k) contributions hitting an all-time high, those investing in their retirement are set to benefit greatly.
Just how much have the benefits risen? According to a recent article on CNBC, the contributions to employer-sponsored retirement plans has seen an average increase of 3.5 percent over a 12 month period.
What’s more, it’s the first time the “average 401(k) savings rate has surpassed the $10,000 mark.”
Fidelity, the nation’s largest retirement provider, of whom put the report into circulation, speculates based on the statistics that the market could further drive retirement benefits into the black.
What’s more, individual accounts also saw new, revised records at the end of the second quarter, with an increase of $96,300, “up 2.4 percent from last quarter.”
So how does this happen?
As the sources state, it’s all about saving, bolstering, and squirreling away money for the future.
But it isn’t wine and roses for everyone. Investors who have initiated a loan or who are in current repayment status have seen flat to no change, coming in at 10.1 percent and 21.9 percent, respectively. Versus money that is matched by employers, which has accounted for 53 percent of the initial rise.
Let us not forget about annuities, though.
Annuities, which are designed to help grow your savings and funds until maturity (annuitization), where they then pay the saver back, have garnered a new-found respect with investors, according to a report on US News.
What is often looked at as a boring, “no respect” way of saving for retirement, is finally getting its comeuppance, whether it is too late or not. As the report says:
[E]xperts say that annuities – already setting sales records – could well innovate in the coming years, provided that the same high-tech changes shaking conventional investments make it to this sector.
While annuities are often viewed as part of a sales-driven sector, connected with individuals who score commission-based sales, they are also a difficult “retirement plan” to put into words, which has especially cumbersome details given that there are 15 types to choose from.
In fact, when one attempts to decipher, conjecture, and compare a 401(k), it’s enough to leave you more confused than when you began.
But for those who don’t know, an annuity is part of an insurance plan that is connected to a greater retirement strategy. You invest in one, and it pays out on future dates or a series of dates, with the amount contingent on the paid-in figure.
There are two basic types of annuities, fixed and variable. Fixed is a guaranteed dollar amount while the variable type is based on the annuity’s underlying investments.
A major drawback for annuities (according to most experts) is how risky they appear on the surface, along with their notoriously high expenses. Not to mention the aforementioned association with pushy salespeople who are trying to simply make a buck. None of which is always the standard, nor the truth.
When compared side-by-side to a 401(k), it’s no wonder people often shun annuities at first. Because, even though an annuity can be just as valid (and sometimes more so) than a 401 (k), without research, care, and guidance they can turn into a horror show in a very short time.
So what about those who are bolstering their retirement by saving money on their own?
Retirement savings are important to life after work. But those who rely solely on plans might be shocked at their saved amounts when that day finally comes.
Consider, instead, looking into measures to drive your savings up. Take a careful look at traditional or Roth IRAs. Perfect for those who want a secure, wise plan for the future.
Further, let someone walk you through the steps on opening up a taxable savings account. Choose between stocks, bonds, and mutual funds (all based on your desired risk level), and start a stash in a brokerage account. With a tax-advantaged plan in place, the growth will allow you to retire on your own terms, free of worry and tumult.
But no matter your road, it’s important to work with someone who you trust.
For more information on how we can help you with your retirement, please don’t hesitate to contact us to schedule a chat.