Despite
According to data from Bank of America,
"Though we continue to see room for improvement around financial wellness, participants ended Q4 with higher 401(k) account balances, and feelings of financial wellness are up compared to 2023 and 2022," says Lisa Margeson, managing director of retirement research and insights at Bank of America. "This data indicates that employees may be feeling increasingly confident about their ability to save for retirement, which is a positive sign for both employers and employees."
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Employers need to take advantage of that swell of optimism. In senior reporter Deanna Cuadra's
"Anyone can have an emergency, and if you don't have a fund, you can end up drawing money out of your 401(k) plan and paying the tax penalty," says Sharon Carson, retirement strategist at JP Morgan. "An emergency fund is the foundation to saving, and then you build up from there."
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While it's important to get employees into the habit of saving as soon as possible, workers
"For employees approaching retirement, it's important to continue contributing to — and maxing out — your 401(k) up until that finish line to ensure you are reaping the benefits of exponential growth," Margeson says. "If you're over 50, you may be able to make an additional catch-up contribution to ensure you're getting the most out of your 401(k)."
Yet some boomers have found themselves "unretiring" — returning to the workforce to make extra money, or to cultivate their professional interests later in life. At Optima Office, CEO Jennifer Barnes told associate editor Paola Peralta that hiring older workers is as beneficial for her company as it is for the seniors she hires.
"Retirement right now just isn't going as far as it could be due to inflation, less profitable investments and other challenges in life," Barnes says. "It has made retirees realize that they can and they want to work a little more and earn a little more income. And we also have higher retention because our people are happier and they stay with us a long time."
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An employee's ability to save will change over time, and being flexible can be beneficial in the end — offering employees the opportunity to review their finances with a professional and make adjustments as needed can help them stay the course, and in some cases, add even more to the retirement pot.
"In general, there are a few factors that may indicate it's time to increase your contribution rate, from major life changes like having a child to individual financial circumstances like a pay raise," Margeson says. "Regardless, it's good practice to annually evaluate your 401(k) contribution rate, if not more frequently, to determine if you need to make any changes to your contributions."
For women in particular, who often
"Unlike what I hear from some of the mothers who say, 'Wow, I regret how I ended up here,' the 20-somethings I'm talking to are [saying] 'Tell me that I'm on track, tell me what I need to do and help me do this,'" says Liz Miller, founder and president of Summit Place Financial Advisors and chair of CFP Board's board of directors "Whether they're married and in a partner situation or they're single, this generation of young women is very involved in their financial decisions and in their investments."
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Whether employees are just starting out, or are contemplating leaving the workforce in the coming months, Margeson encourages employers to start a conversation around what retirement means to them, and how they visualize themselves in the next era of their lives.
"No matter how near or far you are from your retirement, it's never too early to start thinking about two key questions — how much you'll need to live comfortably in retirement, and what will be your sources of income," Margeson says. "Often, employers have resources that can help answer these questions and plan for a well-deserved transition."
