Everyone looks forward to retirement lived in comfort and relative abundance after several decades of working. Ideally, 401(k) savings are supposed to help individuals attain this end. However, this is not what usually happens in reality, according to this Forbes article.
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401(k) offers a convenient way for many workers to create and maintain a savings account for the future. Generally, an average worker’s 401(k) savings amount from only $25,000 to around $75,000. Needless to say, these figures are hardly adequate for any retiree to maintain a lifestyle far from want. In the end, not a few retirees end up living in forced frugality, sometimes with debts to spare.
Many believe that the deficit occurs due to people’s tendency to purchase unnecessary items beyond the acceptable limits of their finances. Conversely, the article from Forbes proved this assumption false.
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The article stated that nearly three-fourths of workers are forced to dip into their retirement savings to pay for short-term and often unforeseen expenses, like medical and car bills. The same is also true for individuals raising children or sending kids to college. Furthermore, the article revealed that people with lower income are more likely to tap into their retirement savings prematurely.
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To avoid using up one’s retirement fund early on, the article suggested that employers can help by allocating funds for emergency savings, which their employees can tap into in times of sudden need. In the long run, this would prevent them from dipping into their 401(k) savings, giving them more opportunities to utilize the funds for a more comfortable retirement.
JSK Associates helps retirees manage their retirement finances. Visit this website to learn more.
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