The Importance of Having a Plan

A new survey finds that workers with 401(k) plans saved four times more than those without access to one when they saved consistently, said they wouldn’t have saved as much if they didn’t have a 401(k) (75%), and felt more secure about their retirement because they are contributing to a 401(k) (84%). On the other hand, while workers say saving for retirement is their top priority, almost two thirds (62%) say that actually saving is harder than they anticipated, and more than a third (35%) say it’s not possible for them to pay their bills now and save for retirement at the same time. According to a new survey sponsored by Wells Fargo, the most commonly mentioned reasons for not saving for retirement included being overwhelmed with current expenses and debt and not making enough money to save. That said, while workers appear to want to save for retirement, only 4 in 10 (38%) of workers age 40+ admit to sacrificing a lot in order to save, and nearly as many (35%) said they had sacrificed nothing (though that was much higher — 49% — among those age 60 and older than among those aged 40-49, where only 25% said they had sacrificed nothing). However, half of workers age 40+ (53%) and retirees (46%) believed that reducing expenses made a difference in their retirement saving. Nearly 7 in 10 (68%) workers age 40+ admit they should have started saving earlier for retirement. And while fewer than half (45%) have been consistent savers, those who saved consistently have accrued a median retirement savings of $160,000 compared with $60,000 for those who did not save consistently. Nor does income appear to be a factor in savings behavior: Roughly a third (31%) of workers with less than $50,000 in household income say they have consistently saved since they began working. Among workers who contribute to a 401(k), the median contribution amount was 10% of their salary. While nearly 7 in 10 (69%) contribute enough to maximize their company’s matching 401(k) contribution, 20% who are eligible don’t take advantage of the employer match. Harris Poll conducted 1,251 telephone interviews of 851 working Americans 40 or older and 400 retired Americans, surveying attitudes and behaviors around planning, saving and investing for retirement. The survey was conducted from July 13 – Aug. 10, 2015.