Retirement Account Trends As A Savings Incentive

Today's retirement account statistics can give you a good idea of how much account

balances can increase, and provide you with the incentive you need to up your contributions. Mutual fund provider Fidelity Investments reports that of its 11 million participants, 55-and-up contributors for the past decade saw average account balances shoot up from barely $100,000 to more than double that amount at more than $210,000. If these participants put away more than 7% of their paychecks, they were likely to see savings increases of 130%, compared to the average balances from 10 years ago. James McDonald, workplace investments president of Fidelity Investments, stated that the past ten years was relatively easier for workers who contributed regularly, despite gloomy market conditions and the erosion of assets and investments.

You can check how viable it is to put away more of your paycheck towards getting a much bigger plan balance by inputting these figures into a retirement savings calculator for use with 401Ks. For example, assume that your yearly salary is at $50,000 and that you contribute 10% of your monthly paycheck towards your 401K, with your employer making matching contributions at 50 cents per dollar you save at a maximum of 6% of your earnings. These is the most widespread degree of contribution, says trade group Profit Sharing and 401K Council of America.

For this specific employee's savings to reach approximately $290,000, he needs to get about 6% in annual investment returns, and have some years wherein he made good money to average out the rest of the decade's profits. If this worker retires after reaching the age of 66 while investing the sum and withdrawing at a 4% annual rate, he'll have a minimum of around $11,600 in income, in addition to Social Security benefits. The estimated income per year would be around $17,500. This will give the worker around $29,000 in living expenses to live on. By no means is this a fortune, although he may be able to live better if he purchases immediate annuities that can result in around $21,000 in yearly income, raising his overall income to almost $40,000.

by: Carina Smith

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