401(k) statements that tell you to contribute more
You. Yes, you. The one sitting there staring at a computer screen. Have you been contributing fully to your workplace 401(k) retirement account?
For many people, the answer is "no." They either don't contribute to their 401(k) plans at all, or, even if they do, they don't put in as much as they should. Jane Kim of the Wall Street Journal says a lot of fund companies are restructuring the statements they send to 401(k) participants, indicating to them that they need to contribute more.
Vanguard's statements (starting later this year) will include estimates of how much money will be available in retirement. Next year, T. Rowe Price is reducing the size of its statements, and including an estimate of how much monthly income will be available to withdraw in retirement.
This is a welcome trend. There are far too many people in this country who don't plan adequately for retirement, either because it's so far away, or they make incorrect assumptions about their assets and sources of funds in their old age. Sending out statements which spell out likely retirement income scenarios will get people thinking, and hopefully contributing, as much as possible.
Fidelity apparently already sends out personal retirement reports every year with this type of information. I've never gotten one, despite being a long-term IRA customer and having a former workplace retirement account through Fildeity, which I turned into a rollover IRA.
I'll post more later about another service offered by Fidelity, that is aimed at retirees.
Here are some sobering stats: 98% of retirees surveyed by Oppenheimer regret how they spent their money before retiring. Among current workers participating in the same survey, 97% regretted "how they and their spouse spent their money considering how much more savings they could have ... Read
I've been doing this on my own for the past three or four years, and lots of other people have been doing the same this year (judging by the massive inflow into international stock funds compared to U.S. funds) but many financial planners and Wall ... Read
Interesting stat, spotted in Kiplinger's: 45% of 401(k) participants cash out the balance when they leave their job. There is no explanation why so many people make this unwise decision, but I have a few suspicions: Read
I wasn't aware of this until the Wall Street Journal pointed it out earlier this month, but a lot of mutual fund companies tie fund-management fees to performance. Fidelity, Vanguard, Ameriprise and USAA have this policy for many funds, and Janus has just proposed using ... Read
It's good that they are adding more information on their statements. It makes people think about their retirement more.
