Saving 15-20% of your income for retirement can buy you a lot of freedom at a time in your life when you really want it. Think seriously about increasing your savings rate.
In 2015, tell your clients — particularly those in their 30s — to aim for 15% contributions of their salary into their 401(k) plans.
With pensions drying up and employers cutting health care plans for retirees, workers are taking a greater share of responsibility for their retirement income security and the 401(k) will shoulder most of the retirees’ costs going forward.
How much to save in that 401(k), however, is in flux. Historically, employers with automatic enrollment features would slot their workers into the plan at a default contribution rate of 3 % of salary or less.
Additional plan design features followed, including auto escalation, which boosts employee contributions by a set percentage each year, and match formula adjustments, which can encourage workers to contribute more of their own money in order to qualify for a match from the employer up to a certain percent.