Plan Sponsors Ask…

May 25, 2016 | posted in: Plan Sponsor Corner | by

Q. Can Participants Really Save $1 Million in Their 401(k) Plans?

A. Many participants really can save $1 million in their 401(k) plans by contributing a modest percentage of pay, if they start early, invest well, and receive regular pay raises.

Columnist Andrea Coombes came to that conclusion after tinkering with the 401(k) calculator at BankRate.com. Specifically, Coombes says a participant earning $75,000 annually and receiving 3% pay raises each year could accumulate $1 million by contributing 7.3% of pay every year for 30 years. The participant would need to get a 7% rate of return on the account and an employer match of 50% of the first 6% of contributions. A goal of $1 million in retirement savings very likely seems out of reach to many participants. Regularly communicating about saving and investing, including showing projections translated into retirement income “paychecks,” can make a difference.

Read Coombes’ MarketWatch column for more information at http://tinyurl.com/SaveMillionMktWatch.

 

For plan sponsor use only, not for use with participants or the general public. This information is not intended as authoritative guidance or tax or legal advice. You should consult with your attorney or tax advisor for guidance on your specific situation. Kmotion, Inc., 412 Beavercreek Road, Suite 611, Oregon City, OR 97045; www.kmotion.com ©2015 Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this publication are for general information only and are not intended to provide tax or legal advice or recommendations for any particular situation or type of retirement plan. Nothing in this publication should be construed as legal or tax guidance; nor as the sole authority on any regulation, law or ruling as it applies to a specific plan or situation. Plan sponsors should consult the plan’s legal counsel or tax advisor for advice regarding plan-specific issues.