I hope you enjoy these short summaries of four of the most interesting and thought-provoking items that have crossed my desk this week…
401(k) savings reach a 12-year high
However, half of all workers aren’t confident about their retirement future. No wonder, considering 56% say they’ve saved less than $25,000.1
According to an article in USA Today2, many 401(k) participants increased their contribution some this past year. If you’re one of them, or are considering doing that, here are some things to think about:
- After a “lost” decade for stocks, before the market turned around in 2009, the 10-year returns of the S&P 500 were negative. Even after a near-record recovery, the 10-year returns remain meager – just 2.7% on an annualized basis for the ten years ending in April.3
That just about equals the inflation rate for that period, wiping out any real gain you might have had for the decade. It also assumes you have no fees or costs (401(k)’s have some of the highest costs) AND assumes you’ll pay no taxes!
And speaking of taxes… what direction do you think tax rates are going over the long term?
If you think they’re going up, as most people we’ve surveyed do, and you’re successful in growing a nest-egg in your 401(k), you’re only going to pay higher taxes on a bigger number!