Time to save more and you may not have a choice! Some companies are automatically enrolling their employees in the 401k plan.
Not only that, some are raising the amount of money you save in the plan each year! According to Bloomberg News, 68 percent of large companies now do this. And 75 percent oF THOSE take the second step, bumping up your savings rate each year.
Now, the percentages they’re forcing workers to save aren’t that big: 3 percent and 6 percent are typical to start and some keep raising the rate until they get to 10 percent. Experts say 12 to 15 percent of your earnings would be a better way of securing your future.
•About a third of companies that make you sign up for the 401k, make their own stock one option for you to invest in. That can be problematic when times are tough because it’s a single company and not diversified.
•75 percent of firms now offer their employees Roth IRAs, which is nice. You probably remember that with Roths, you pay tax on the money before you put it in, but pay no tax when you take it out. Assuming it’s grown, that can be a great benefit.
•More than half of employers now offer workers a chance to have an individually managed 401k account, instead of just generic options. Unfortunately, this level of service comes with an extra fee. Consequently, few employees are taking them up on it.
So there you have it, a fascinating trend in the world of saving more. I like the fact that more people with have nest eggs because of this policy. But I dislike the idea that employees are sheep and need herding. What do you think? Should employers automatically enroll their employees in 401k plans? Leave me a voicemail at EasyMoneyShow.com and sound off.