This last year, CNN reported that 401(k)s hit a record high, with Fidelity Investments reporting an average balance of $91,300. This represents a jump of over 30% from 2011?s average balance of $69,100! So why the sudden growth?
Well, part of it is due to changes in the stock market: the S&P 500 climbed by over 10% this last year, making it the index?s third year of double-digit gains. The real change, however, occurred in worker contributions. In a 4% spike from the year before, workers and their employers contributed an average of $9,670 to their 401(k) balances in 2014.
401k Retirement Plans
Financial planners usually recommend that workers (combined with employer matching) contribute somewhere between 10% and 15% of their annual salary to their 401(k) balance. In 2014, workers and their employers saved an average of 12% of their salaries, falling right into this recommended range. As Fidelity vice president Jeanne Thompson points out, 401(k)s are the main, if not only, source of retirement savings for many, so these days, there?s a better understanding of why it is so important to contribute to one.
So why does this growth matter for you?
“The typical American worker will see markets go up and down many times during their career,” Jim MacDonald, president of workplace investing at Fidelity, said in a statement. “Commitment to a long-term savings and investing strategy will put individuals in the best position.”
For those reaching retirement age, being prepared for the future, and for the effect their passing can have on their loved ones is vitally important, and protecting their assets to ensure their loved one?s futures are secure is essential. Whether we are talking about a working professional still contributing to their 401(k), or a retired senior living off their retirement savings, having proper life insurance coverage is key to make sure those savings don?t go to waste.
401(k)s & Investment
401(k) plans vary in when you will need or want to take control of funds, and it?s important to know how to reposition these assets when the time comes. When transferring these funds to an individual retirement account (IRA) — which is key to protecting these assets from income tax on the lump sum — it is important to realize there are many options for you to consider. Whether it be an accumulation annuity (such as Sagicor?s Sage Advantage), an income annuity, cash equivalents, bonds, or equities, it?s important to know where to place and position these funds for retirement and other planning goals. These IRAs can later be used to fund life insurance policies such as single premium life (like Sagicor?s Single Premium Life), wealthshare plans (like EquiTrust?s WealthPay Life) , or no-lapse Universal Life (which will allow for maximum wealth transfer).
Picking the right strategies, products, and designs to protect and position your assets can be difficult, and finding a qualified advisor who can tell you how best to transition these assets is the most important thing you can do with regards to taking control of 401(k) funds. Saving is important, but having a plan for those savings is key. Luckily, SilverSide Insurance Marketing is here to help! We have a number of reliable policies available through our trusted insurance carrier partners, so be sure to check out all the products we have to offer! Most importantly, make sure to contact SilverSide to be matched with a qualified agent in your area today!