10 Retirement Quick Facts for August

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Here are some great stats, figures and trends to help with the oversight of your company sponsored retirement plan and may aid in conversations or communications with plan participants.  

  1. MID-LIFE CRISIS.  Most people don't start thinking about retirement until age 42, and underestimate the number of years in retirement and how much they will need. (Source: Empower & Stanford Center on Longevity)
  2. GROWING OLDER, GROWING DEBT.  More Americans aged 50 or older have debt (71%) now than older households did in 1989 (58%). In 2016, the median amount of debt for older Americans was 3 times higher and the ratio of debt to assets was 2 times higher than in 1989. (Source: Government Accountability Office
  3. THE BEST AND THE BRIGHTEST.  Auto enrollment and saving to the match are the top 2 factors that drive retirement savings. Together, they pull in 71% of young employees (under age 30) and 50% of older employees (over age 50). (Source: PLANSPONSOR)
  4. HERE TODAY, GONE TOMORROW.  Based on today's formulas, the monthly Social Security benefit for someone born in 1970 with average income will be $1,638 if she claims at age 62, $2,421 if she waits until 67, and $3,063 if she waits until age 70. Without Social Security reform, these benefits will be cut by at least 20% by early 2030s. (Source: National Bureau of Economic Research)
  5. CALL AN EXPERT. 40% of workers say they don't know who to go to for financial and retirement planning advice. While 27% of workers have a financial advisor, 35% turn to family and friends, and 35% go online to do their own research. (Source: Employee Benefit Research Institute)
  6. DOL'S TOP 10 FIDUCIARY BREACHES. The DOL's Employee Benefits Security Administration enforces Defined Contribution plan compliance with ERISA. It recovered over $3 billion in benefits for plan participants in fiscal year 2020. The top 10 violations account for 97% of all violations and include fiduciary imprudence, fiduciary self-dealing, and failures to follow plan documents. (Source: Government Accountability Office)
  7. SECURE ACT 2.0 GOING STRONG. The House is reviewing the SECURE Act 2.0 and the Senate a similar proposal - both with broad bipartisan support. Both proposals would lower part-time employee eligibility from 3 years of service to 2, allow employers to make matching contributions into a 401(k) plan based on an employee's student loan payments and allow employers to offer a small financial incentive to participate in the plan. (Source: H.R. 2954 and S.1770)  
  8. INVESTMENT PULSE CHECK. A majority (78%) of plan participants are satisfied with the investment options available in their retirement plan, but this is a decrease from last year. 33% say they would like better explanations for how much income their savings will produce in retirement, and 31% want more investment options. (Source: Employee Benefit Research Institute)
  9. 401(K) DISCOUNT. At the end of 2020, 94% of mutual fund assets in 401(k) plans were held in institutional and retail no-load share classes. The average expense ratio in 2020 for an equity mutual fund in 401(k) plans was 0.39% and for hybrid mutual funds, 0.44% (Source: Investment Company Institute)
  10.  DOG DAYS OF SUMMER. August is National Dog Month, celebrating our lovable canine pals smack in the middle of the dog days of summer only seems logical. Dogs are the most commonly owned pet on the planet with more than 63.4 million American households owning at least one dog. Did you know that scientific studies prove our four-legged companions make us happier, less stressed, and more optimistic? (Source: The Humane Society of the US)

QUESTION. Did you know the Department of Labor recently issued guidance on cybersecurity matters in an effort to mitigate risks to 401(k) and other retirement plans? If you'd like the tips and best practices that were issued, reach out to Allied and we would be happy to share them with you.

The views expressed in this post represents the opinion of Allied Investment Advisors, a Registered Investment Adviser. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment or services. Nothing contained herein constitutes financial, legal, tax, or other advice. The information provided herein is obtained from sources believed to be reliable, but no representation or warranty is made as to its accuracy or completeness. Investing in equity securities involves risks, including the potential loss of principal. While equities may offer the potential for greater long-term growth than most debt securities, they generally have higher volatility. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations. Investment recommendations may change and readers are encouraged to check with their investment advisors before making any investment decisions. Past performance is not indicative of future results. Investments are not a deposit of or guaranteed by a bank or any bank affiliate. Please notify Allied Investment Advisors if there have been any changes to your financial situation or investment objectives or if you wish to impose or modify any reasonable restrictions on the management of your accounts through Allied Investment Advisors.