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Retirement savings shouldn’t be fooled with, so Lincoln Financial debunks some common misconceptions
Most Americans may know why the chicken crossed the road, but according to research from Lincoln Financial Group, nearly 60% of retirement plan participants say they are not on track with their savings1. This April Fool’s Day, let’s put the jokes aside and celebrate "4/01(k) Day" instead, and ensure you don’t fall for one of these common misconceptions.
According to a recent survey of U.S. employees2, people saving for retirement are confused about several key areas, including how much to save, how to prioritize paying off debt vs. savings and rollovers. The celebration of 4/01(k) Day starts with a simple true/false quiz:
"Saving enough to meet the employer match is enough to keep me on track for a comfortable retirement."
(Most likely) False! An employer match (if offered) is a good place to start, but if you really want to make sure you have enough of a nest egg to retire when and how you want, a good rule of thumb is to save at least 10 to 15 percent of your salary.
"Paying down my student loan debt as quickly as possible is more important than saving for my retirement."
True…or False. While you should not delay saving for retirement, it’s a good idea to speak with a financial professional to determine how to strategize paying off debt while also planning for your future. You can also use free tools like this debt calculator to help you make a plan for paying off your debt.
"I’ve thought about moving money from an old employer’s 401(k) into my current employer’s 401(k), but it seems like it would be too much of a hassle."
False! While it is important to consider all options of your 401(k) platform prior to making a decision, the process for a rollover is typically very easy and brings multiple benefits. Instead of tracking investment selections, performance or statements for multiple accounts, for example, you’ll only have to monitor a single account.
But here’s the punch line — while there are still plenty of misconceptions when it comes to saving for retirement, nine in 10 of those surveyed are no fool when it comes to prioritizing their future, and disagree with this statement: "Saving for retirement is not my top priority because I’ll have plenty of time to save for retirement in the future once I am earning a higher income."
This is great news, as delaying saving for retirement can have a big impact due to the value of compound interest.
"Our research shows that while participants understand the importance of saving for retirement and see it is a top financial priority, there is still a need for ongoing education to help them achieve their financial goals," said Aaron Moore, senior vice president, retirement plan client engagement, Lincoln Financial Group. "By leveraging high-touch, personalized service, combined with access to dynamic digital tools, we can help participants save for the retirement they envision."
Employers can also help their employees by offering financial wellness tools. Lincoln Financial’s financial wellness solution, WellnessPATH, can help savers create a holistic picture of their finances, so they can better manage competing financial priorities. The tool helps participants evaluate how they are doing in four key areas: saving, debt, spending and protection, so that they can learn how to make better decisions and take action to improve their financial health.
For more resources, tools and calculators, visit LincolnFinancial.com/retirement.
About Lincoln Financial Group
Lincoln Financial Group provides advice and solutions that help people take charge of their financial lives with confidence and optimism. Today, more than 17 million customers trust our retirement, insurance and wealth protection expertise to help address their lifestyle, savings and income goals, and guard against long-term care expenses. Headquartered in Radnor, Pennsylvania, Lincoln Financial Group is the marketing name for Lincoln National Corporation (NYSE:LNC) and its affiliates. The company had $303 billion in end-of-period account values as of December 31, 2020. Lincoln Financial Group is a committed corporate citizen included on major sustainability indices including the Dow Jones Sustainability Index North America and FTSE4Good. Dedicated to diversity and inclusion, we earned perfect 100 percent scores on the Corporate Equality Index and the Disability Equality Index, and rank among Forbes’ World’s Best Employers, Best Large Employers, Best Employers for Diversity, and Best Employers for Women, and Newsweek’s Most Responsible Companies. Learn more at: www.LincolnFinancial.com. Follow us on Facebook, Twitter, LinkedIn, and Instagram. Sign up for email alerts at http://newsroom.lfg.com.
1 2019 Lincoln Retirement Power® Participant Study
2 Retirement Savings Plan Perceptions & Misconceptions Among U.S. Employees, Lincoln Financial and CivicScience (2020)
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