U.S. will Need more than 15 Times their Final Pay to Reach their Retirement Goals

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It’s no surprise that the recession of 2009 adversely affected everyone’s retirement portfolio. First, with the plunge in the investment markets and second because most employers had to freeze salary and wage levels and eliminate raises, bonuses and, in many cases, matching 401(k) contributions.

According to a recent Hewitt Associates study, employees in the U.S. will need more than 15 times their final pay to reach their retirement goals. The upside is that this number hasn’t increased, but still more than 80% of all workers are not likely to accumulate enough financial resources to retire as they expected, especially when considering inflation and healthcare costs.

For many workers, the simple solution is to start saving, since 26 percent of eligible employees currently do not contribute to a retirement plan. For other employees, they are faced with increasing their contribution rate, regularly, and some will have to work longer, so they can save more. According to one expert, people who continue to work until age 67 are likely to reach 98% of their retirement financial goals.

Employers can have a role in helping employees improve their retirement funding, and not just by giving employees raises, bonuses and resuming or increasing 401(k) matching contributions. As the economy improves, many employers will be able to increase employee wages, etc. What many progressive employers are doing is to offer personal-finance training or advice from experts to help and encourage employees to save. This is a kind of employee benefit that is very cost-effective, since it also serves as an employee retention method.

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