How the Grizzly Sleuth Saves
So I’m a little bit in love with the investment company Vanguard (Mrs. Grizzly is sometimes a bit jealous). All of our investments currently sit there, and it’s always what I recommend to my friends and family. They’re one of the best, most honest financial firms out there, but to top it all off they also come out with great research! (No I’m not being paid to market for them, I just have a little bit of a man crush on John Bogle)
How America Saves
I was wandering around the internet last night, reading financial research papers (It’s what I do for fun! I’m pretty exciting!), and I came across the gem of Vanguards 15th annual How America Saves report. It’s a detailed look at all of the defined contribution plans (401k’s) held at Vanguard, and since Vanguard is one of the largest asset managers out there the details are pretty comprehensive. And enlightening! It’s a few months old at this point, but there are some very interesting tidbits about how we all could be doing better.
Free Money – The participation rates fell in 2015, down to a low of 66%. This is while over 95% of the plans were offering some sort of employer contribution! Employer match to a 401k plan is FREE money that’s being left on the table by anyone who doesn’t take advantage of it. There no indication of how much is being forfeited, but given the size of the Vanguard sample, it’s a HUGE amount.
Taking money off the table – 15% of folks are removing the money from their retirement balances when they take distributions (i.e. not rolling over into an IRA). Another big mistake! This forces you to pay income tax immediately AND an additional 10% penalty on the withdrawals. Don’t do this! Even most credit cards, as much as I hate them, are a better way to access money if you can pay them off ASAP. Taking money out of a 401k is potentially giving up 25-35% of your balance immediately.
Not enough money on the table – Since 401k’s are the primary way most Americans save, the median balances paint a bleak picture of most prospects for retirement. At $26k the median balance is only 0.4x of the median salary of the eligible workers. Very far from the 25 x they’ll need.
Introducing ‘How the Grizzly Sleuth Saves!’
But as I was reading, the big thing I started thinking about was how we’d love to learn a bit more about our own readers! There are about 500 or so of you hanging around every day now. We’d love to get a sense of where you are on your own retirement journey. How much do you save every year? What’s your net worth? How close are you to retirement? So if you have a couple seconds take some time and fill out the few questions below (or go here). If you complete it you’ll see the results immediately. We’ll also publish the results in a few weeks along with some more detailed analysis!
(FYI: a sleuth is the name for a group a bears!)