Are you saving enough? How are you saving? What else should you know about your retirement? Don’t be complacent about your 401(k). Take a peak at these three headlines to learn more about the questions you should ask and how you can begin answering them.
Most 401(k) participants not saving enough
Most investors between the ages of 21 and 50 are focused on saving for retirement, but most are not saving enough.
An online survey conducted by Harris Interactive on behalf of T. Rowe Price in August also found that some investors are not even sure how much they are saving.
The survey also found that nine out of 10 of those surveyed who had access to an employer’s 401(k) plan are currently contributing to the plan. Seventy-two percent said that saving for retirement is their top financial goal, followed by maintaining or improving their current lifestyle (50 percent), creating or adding to an emergency fund (36 percent) and paying off debt (34 percent), such as credit card balances.
Mutual Fund Share Classes and Your 401(k)
The recent fee disclosures for the investment options in a company’s 401(k) plan may shed some unwanted light on some plan’s investment choices.
That’s because many fund families offer multiple share classes for their funds used in 401(k) plans, and those share classes come with different costs. While the underlying holdings of a fund may be identical, investor’s returns will vary based on the expense ratio of each individual share class.
Funds offered by American Funds, a staple in many 401(k) plans, are a good case in point. They offer six retirement plan shares classes, labeled R1-R6 (that’s in addition more than a dozen types of share classes offered for everyone from retail investors to those with college savings accounts).
10 things 401(k) plans won’t tell you
- For more and more Americans, the quality of one’s retirement comes down to the quality of one’s 401(k).
- When it comes to actually figuring out how much to save to live a comfortable retirement, most workers are on their own.
- The burden on employees to provide for their own financial security is huge, and the best advice companies can give is simply to encourage their workers to save.
- The system isn’t working for employees — or employers.
- New Department of Labor regulations went into effect this year requiring plan providers to disclose the amount in fees that both companies and their workers pay for their 401(k) plans. The intention was to shed light on notoriously murky 401(k) fees. It’s one of the few instances where the consumer of the product—both employers and employees alike — often have little idea what they’re paying for, thanks to buried fees.
(read the next 5 and more about each topic here)