NEW YORK (MainStreet) –- When enough financial advisors start saying the same thing at the same time, it's usually a good idea to listen -- especially when they're saying you have no idea what you're doing with your retirement.
Voya Financial's Retire Ready Index found that a subset of U.S. workers is all too willing to hand over the responsibility of their retirement planning to their employer. Among workers participating in an employer-sponsored retirement plan, 33% are saving only the amount their employer will match with their own contributions. About 20% couldn't even be bothered to figure out what that amount would be and saved an amount pre-determined by their employer. Just 17% contributed up to the maximum amount allowed by their employer's plan, while 29% said they used “some other method” to determine what they should contribute.
“With the grim outlook on the future of Social Security and pension plans becoming a thing of history, relying on your employer’s retirement plan to fund your golden years may just not be enough anymore,” says Thomas Walsh, an investment analyst with Palisades Hudson Financial Group in Atlanta. “Contributing to an employer plan such as a 401(k) is a great start for retirement saving, but the more you can save for the future, the better.”
Even that half-hearted approach to retirement is far more proactive than many American workers have been with their retirement planing. According to a recent study of 1,000 U.S. workers by financial services firm Edward Jones, 45% of non-retired U.S. workers aren't saving for retirement at all. Of that group, only 36% plan to do so in the future and almost 10% say they aren't planning to save for retirement at all. While 58% of respondents 18 to 34 years old have not yet started saving, 90% say they have or plan to start saving for retirement before they turn or turned 30. However, as a testament to the power of procrastination, 26% of 35- to 44-year-olds say they plan to start saving in their 40s.
"When it comes to retirement savings, there’s a big difference between planning to save and actually doing so," said Scott Thoma, principal and investment strategist for Edward Jones. "While intentions to save for retirement are legitimate, individuals tend to satisfy more immediate, short-term spending goals and push off their long-term saving goals. This behavior can be incredibly detrimental for individual investors, particularly as they enter the critical savings periods of their 30s and 40s when they have, and unfortunately waste, a tremendously valuable asset -- time."