Costly Financial Mistakes Chris Mathews writes in Fortune magazine that Americans throw away billions of dollars through "financial stupidity." And by that he means everything from not taking advantage of home refinancing opportunities to making poor retirement planning decisions.
But he notes there is plenty of research that shows that creating systems where it’s easier to make the right financial selections leads to more people making good choices. Private companies, he argues, are partly responsible for making their employees’ retirements as comfortable as possible.
That means "setting up automatic enrollment, automatic escalation of their contributions, and, most importantly, not giving the option to invest in high-fee funds. It also means that employers need to make sure that their employees have the knowledge to make the right choices."
57 percent of workers did not increase their plan contribution after their last raise. The most common reason cited for not doing so was an immediate need to pay expenses. On the positive side, 25 percent of respondents who didn’t increase their contributions after their last raise said the reason was because they were already contributing the maximum amount to their retirement plan.
37 percent of respondents who were not automatically enrolled in a plan reported that they waited six months or longer to enroll, and one in four employees (24 percent) waited a year or more.
Workers Weigh in on 401(k) Investing A new survey from Charles Schwab surveyed more than 1,000 workers across the country about 401(k) investing habits. Nine out of ten participants say they will rely on themselves for the money they need in retirement.
87 percent say that the 401(k) is a “must-have” benefit, more than disability insurance (45 percent), life insurance (42 percent), extra vacation days (34 percent) or the ability to telecommute (15 percent).
Respondents say they are much more likely to have someone change the oil in their car (87 percent) or help them landscape (32 percent), than have someone help them choose their 401(k) investments (24 percent).
Yet only 39 percent feel extremely or very confident in their ability to make the right investment decisions on their own.