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National 401(k) Day Reminds Us to Pay Attention to Our Retirement Nest Egg

By Edward “Ed” V. O’Neal, Senior Vice President and Manager, Retirement Plans

Most people dream of a certain lifestyle during their retirement years. For some it might include exciting travel destinations, while for others it might entail volunteering for their favorite charity or starting a long-overdue business venture. National 401(k) Day, celebrated every year on the Friday after Labor Day, serves as a great reminder to check on our retirement nest egg and retirement goals.

Although the month of September is typically associated with the celebration of Labor Day, over the past several decades this month has also included the celebration of National 401(k) Day. Scheduled for September 9 this year, National 401(k) Day was created by the Profit Sharing Council of America (PSCA) in 1996 and intentionally planned the date so that employees could “start the week with Labor Day and end the week with Retirement.” This “holiday” generally promotes a range of retirement themes including retirement savings education, encouraging employers to sponsor retirement plans for their employees, educating employees about the benefits of participating in an employer sponsored retirement plan and general retirement planning and retirement readiness topics.

Despite these efforts, surveys show that only 70% of Americans feel financially prepared for retirement. And although 79% of Americans work for employers offering a 401(k) plan, only 41% take advantage of the benefit.*  To help combat and improve these statistics, an increasing number of employers are making design changes to their retirement programs to help improve employee chances of increasing their retirement nest eggs and meeting their retirement goals, such as:

  1. Automatic enrollment of new employees into the 401(k) plan
  2. Establishing a default salary deferral rate for new employees
  3. Establishing an automatic escalation provision to annually increase employee salary deferrals
  4. Establishing a default investment selection for new employees in a diversified investment option
  5. Eliminating or restricting plan loans to limit employee ability to access assets before retirement or separation from service.

Additionally, here are some best practices that employees can utilize to help improve their chances for retirement readiness:

National 401(k) Day reminds us that there is still work to do in improving employee confidence in meeting their retirement goals and establishing a secure retirement.  Retirement planning can be complex, and it seems that retirement regulations change as frequently as the market, which can cause undue stress and frustration. Taking a measured approach to retirement planning and incorporating key best practices can lead to better financial outcomes and improve your chances of a secure retirement. Happy National 401(k) Day!

*SpiritoftheHolidays.org (National 401k day)

Benjamin F. Edwards does not provide tax advice, therefore it is also important to consult with your tax professional for additional guidance tailored to your specific situation.