Search
 

Getting the message across: Start saving early

It's not so much a lack of desire to save as it is a lack of educating employees on the benefits of saving that hinders participation in retirement plans.

By Liz Davidson | Updated on May 04, 2010

In our Personal Financial Basics workshop, we show employees that saving in their retirement plans early in their careers is much more effective than trying to play catch up later. In our example, Duane (our early saver) contributes $960 a year to his employer sponsored retirement account for 10 years beginning at age 26. His sister (and our late saver) Jane contributes the same amount per year to her retirement account for a period of 30 years starting at age 36. We then ask the group, “Assuming they both make an 8 percent rate of return, who do you think will have more for their retirement?” Often times we hear, “Jane, because she’s saving longer!”

Well, as you probably have guessed, because of his head start, and the power of compounding, Duane ends up ahead with a nest egg close to $140,000, compared to his sister Jane who has managed to accumulate only about $110,000. For many participants this example serves as a wake-up call motivating them to start contributing to their own retirement plans as soon as possible. By simply seeing the difference, they now have a reason to save.

Complete your profile to continue reading and get FREE access to BenefitsPRO.com, part of your ALM digital membership.

Your access to unlimited BenefitsPRO.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical BenefitsPRO.com information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com

Already have an account?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Recommended Stories

BenefitsPRO

Join BenefitsPRO

Don’t miss crucial news and insights you need to navigate the shifting employee benefits industry. Join BenefitsPRO.com now!

  • Unlimited access to BenefitsPRO.com - your roadmap to thriving in a disrupted environment
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
  • Exclusive discounts on BenefitsPRO.com and ALM events.

Already have an account? Sign In Now
Join BenefitsPRO

Copyright © 2024 ALM Global, LLC. All Rights Reserved.