From 401 Specialist Mag
OK, we realize that the Friday after Labor Day is traditionally recognized as National 401k Day, but if it wasn’t for April 1 being April Fool’s Day, can there be any doubt advocates of the venerable 401k retirement savings plans wouldn’t push for awareness on 4/01 every year instead?
After all, “National 529 College Savings Plan Day” is celebrated on the 29th day of the fifth month of the year—5/29—with states all over the nation promoting the college savings tool. And don’t even get us started on “4/20 Day” fancied by cannabis aficionados everywhere, or “Star Wars Day” on May 4th (May the Fourth Be with You).
The marketing folks over at Lincoln Financial get it. They sent out a press release this week titled, “Forget April Fool’s Day—Celebrate ‘4/01(k) Day’ Instead,” adding that retirement savings shouldn’t be fooled with, so Lincoln Financial debunks some common misconceptions.
It’s bound to go over much better than this year’s first widely publicized attempt at April Fool’s Day humor, when Volkswagen announced it was changing the name of its U.S. subsidiary to “Voltswagen” to underscore its commitment to electric vehicles.
“This April Fool’s Day, let’s put the jokes aside and celebrate ‘4/01(k) Day’ instead, and ensure you don’t fall for one of these common misconceptions,” the Lincoln Financial press release says.
According to a recent survey of U.S. employees, people saving for retirement are confused about several key areas, including how much to save, how to prioritize paying off debt vs. savings and rollovers. The celebration of 4/01(k) Day, Lincoln Financial says, starts with a simple true/false quiz for consumers/aspiring retirement savers:
- Question #1: “Saving enough to meet the employer match is enough to keep me on track for a comfortable retirement.”
Answer: (Most likely) False! An employer match (if offered) is a good place to start, but if you really want to make sure you have enough of a nest egg to retire when and how you want, a good rule of thumb is to save at least 10% to 15% of your salary.
- Question #2: “Paying down my student loan debt as quickly as possible is more important than saving for my retirement.”
Answer: True…or False. While you should not delay saving for retirement, it’s a good idea to speak with a financial professional to determine how to strategize paying off debt while also planning for your future. You can also use free tools like this debt calculator to help you make a plan for paying off your debt.
- Question #3: “I’ve thought about moving money from an old employer’s 401k into my current employer’s 401k, but it seems like it would be too much of a hassle.”
Answer: False! While it is important to consider all options of your 401k platform prior to making a decision, the process for a rollover is typically very easy and brings multiple benefits. Instead of tracking investment selections, performance or statements for multiple accounts, for example, you’ll only have to monitor a single account.
But here’s the punch line—while there are still plenty of misconceptions when it comes to saving for retirement, nine in 10 of those surveyed are no fool when it comes to prioritizing their future, and disagree with this statement: “Saving for retirement is not my top priority because I’ll have plenty of time to save for retirement in the future once I am earning a higher income.”
This is great news, Lincoln Financial says, as delaying saving for retirement can have a big impact due to the value of compound interest.
“Our research shows that while participants understand the importance of saving for retirement and see it is a top financial priority, there is still a need for ongoing education to help them achieve their financial goals,” said Aaron Moore, senior vice president, retirement plan client engagement, Lincoln Financial Group. “By leveraging high-touch, personalized service, combined with access to dynamic digital tools, we can help participants save for the retirement they envision.”
Employers can also help their employees by offering financial wellness tools. Lincoln Financial’s financial wellness solution, WellnessPATH, can help savers create a holistic picture of their finances, so they can better manage competing financial priorities. The tool helps participants evaluate how they are doing in four key areas: saving, debt, spending and protection, so that they can learn how to make better decisions and take action to improve their financial health.
So while April 1 is not officially “401k Day,” an opportunity still exists for advisors interacting with plan participants to educate them in a fun way with quizzes such as the one Lincoln presented, or perhaps quiz them on these 6 Retirement Rules of Thumb Most Americans Get Wrong.