This post is part of the “Save 1% More” initiative started by Jim Blankenship, CFP at FinancialDucksInARow.com. We are encouraging Americans to start saving 1% more into their retirement plans.
Americans are lousy savers. We can blame it on low wages, a tough economy, or a multitude of other reasons, but the end result is the same... we aren’t saving enough for retirement. The average American family has $35,000 in retirement accounts, can’t afford a $1,000 emergency expense, and only 38% believe they will retire comfortably.
So what can we do about it? You can’t change how much others are saving, but you can certainly change how much YOU are saving.
For many workers, it is open enrollment time. This is your chance to select the optimal health insurance plan, opt into using tax-advantaged accounts such as Flexible Spending Accounts (FSA’s) and your opportunity to reevaluate your 401(k) contributions for 2013.
The challenge, should you choose to accept it, is to raise your 401(k) contributions by at least 1%. This means if you were contributing 10% in 2012, you have to move to 11%. If you weren’t contributing at all, then start at 1% for 2013. And 1% is just a minimum... try for 3%, or even 5%!
What do you get for your efforts? Well, if you e-mail me at firstname.lastname@example.org to let me know you have raised your contribution at least 1%, I will send you a $10 gift card to Walmart to help with holiday shopping. That’s right... not only do you save more money for retirement, you get a free $10 gift card. I will make this available to the first 10 people that e-mail me some sort of evidence of their new contribution amount. Please be sure you black out account numbers and personal information!
Still not convinced? For a 30-year-old worker making $60,000 per year, a 1% increase in savings could result in saving $114,710.42 by retirement! They are only saving $50 a month, but could end of with over $100k in savings! And that doesn’t even account for potential pay raises in the future. Just think what would happen if you increased by 1% every year for the next 10 years.
What if you don’t have an employer sponsored retirement plan? Then setup to automatically contribute 1% of your paycheck to a Roth or Traditional IRA. You can have your HR department do this, or have it auto draft from your bank account each month.
So... are you willing to take me up on my challenge? I sure hope so... Remember, you may not be able to single handedly increase the savings rate in America... but you can increase yours. Good luck!
Other Financial Bloggers Participating:
From Michele Clark: Employer Retirement Accounts: 2013 Contribution Limits
From Roger Wohlner: Need Post-Election Financial Advice? Try the 1% Solution
From Sterling Raskie: A Nifty Little Trick to Increase Savings
From Theresa Chen Wan: Saving for Retirement: The 1% Challenge for 2013
From Mike Piper: Investing Blog Roundup: Saving 1% More
From Robert Wasilewski: Increase Savings Rate By 1%
From Steve Stewart: Seriously. What’s 1 percent gonna do?
From Jim Blankenship: Add Your First 1% to Your 401(k)
From Laura Scharr: In Crisis: Personal Savings- Here Are Six Steps to Improve Your Retirement Security