Retirement Savings Change Based on Income Projections
The Boston College Center for Retirement Research released a study that involved over 15,000 employees who were offered projections of their retirement income based on potential voluntary contributions. The projections changed the way individuals decided to contribute to their savings.
According to the study, the less awareness individuals had about the impact tax-deferred contributions can have on their future retirement income, the less they were inclined to save. Savings increased even more for those who were offered projections of their retirement income combined with information on retirement planning. However, the savings choices of those with impulsive financial tendencies and a habit of procrastination were not affected as significantly.
How much did revealing potential retirement income change savings habits? The study showed individuals decided to contribute over $1,100 more per year to their retirement savings. Researchers found by combining employee education on the basics of retirement planning with projected retirement income based on their age, confidence increased along with their knowledge.
North Carolina residents engaging in retirement planning will need to consider income, investments, potential long-term care costs and other expenses, and the impact of any business interests. A meeting with a Certified Financial Planner in North Carolina is an opportunity to reveal issues that are unique to your situation so that you can accurately project your potential retirement income. Once you create a retirement plan, your financial advisor will work with you over time to develop a strategy that will change with you as your life changes. Statistically, having this extra knowledge in advance will increase the probability you will contribute more to savings and enjoy a greater retirement income than you would have otherwise.