Simply Irresistible: Make Your 401(k) a “Must Have” by Encouraging Increased Contributions
Your company’s 401(k) is a valuable tool for preparing yourself and your employees for retirement and attracting and retaining the top talent your firm needs to grow and thrive. When people feel vested—and invested—in the place they work, this helps them become more productive, more team-focused, and more loyal.
But are you doing enough to encourage your plan participants to really commit? If you’re wondering whether your employees could be socking more away in your company plan, you’re not alone. A recent study of 401(k) balances and overall retirement planning shows that participants ended the second quarter of 2024 with higher balances, while contribution rates remained steady. Bank of America’s 2Q, 2024 Participant Pulse report shows that more participants (86.7%) kept their contribution rate steady in the second quarter compared to the first (81.2%). Overall, they had an average contribution rate of 6.5%, consistent with year-end 2023.
In addition, the average contribution rose 20% over the last two quarters, registering at $1,565 in the second quarter, up from $1,312 in the fourth quarter of 2023, but comparable to a year earlier at $1,460 in the second quarter of 2023.
Meanwhile, the average account balance as of June 2024 was $93,054, up 8% compared to year-end 2023, when it was about $86,000.
Why should that matter to you as an employer? For one thing, the more financially secure your employees feel, the higher their quality of work. (Have you ever tried to concentrate on work when you were worried about personal money problems?) Additionally, employees who consistently max out their 401(k) plans are more likely to be “bought-in”: they want to see the enterprise succeed because they have more skin in the game.
At Savant Wealth Management, we know how important it is for your plan to be well-integrated with your business goals and position in the marketplace. If you would benefit from a careful review of your plan, please contact our Retirement Plan Services team.
Source: How 401(k) Plan Participants Have Fared so Far in 2024
This is intended for informational purposes only. You should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for, personalized investment advice from Savant. Please consult your investment professional regarding your unique situation.
Historical performance results for investment indices, benchmarks, and/or categories have been provided for general informational/comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results. It should not be assumed that your account holdings correspond directly to any comparative indices or categories. Please also note: (1) performance results do not reflect the impact of taxes; (2) comparative benchmarks/indices may be more or less volatile than your accounts; and, (3) a description of each comparative benchmark/index is available upon request
Patricia L. Hutchinson
Director of Retirement Plan Services
MBA