piggy bank

Fidelity Reports Increasing Savings Rate

According to Fidelity’s annual analysis, their almost 14 million participants showed a 6% increase in their savings rates over 2015, with contributions peaking at 12.7% including the company match.

The average balance for accounts over ten years old was $240,700. Less than .3% of participants shifted investments and overall, average account balances in 401(k)s dipped only $4,500 from first quarter 2015 to first quarter 2016 in spite of all the market volatility.

A recent Gallup poll reported that two-thirds of people prefer saving to spending. States are implementing, or are giving consideration to implementing workplace retirement plans to cover those smaller companies where no options for retirement savings are available.

With today’s workforce being mobile, many investors have multiple accounts in both DC plans and IRAs. This diversity makes it more difficult for individuals to manage. According to the Retirement Clearing House, over half of the DC participants leave their funds in their previous plan. Further, merely 20% of participants have worked out a plan to roll their assets over to their new plan options.

Over 40% of every dollar invested in a DC plan by workers younger than 55 years old cash out their plan. There is a question that this could be due to the possibility that smaller investors don’t have access to advice.

At QBI each client has access to a wealth of resources from defined-contribution and defined-benefits teams, resources that include plan design experts and superior administration services. Each plan is supported by customized resources and assigned a single point of contact.

Record keepers should be encouraging participants to roll in all of the assets from different IRAs and DC plans from former employers. Besides benefiting the employees by reducing the financial stress of being prepared for retirement (which could improve employee productivity), it would also improve plan service and pricing by providing for additional assets in the new employer’s plan.

Many companies are beginning to recognize that the key to effective plan management – including roll-ins and separated workers -- is having a superlative record keeper who can effectively manage both the process as well as the communications with retirees.

For a better explanation of the features and functionality of the services offered at QBI please contact one of our Sale Consultants.

How do Defined Benefit Plans become Underfunded?

Many Defined Benefit Plans have promised more benefits than they have assets set aside from...

Read more

457(b) Retirement Plans

For Tax-Exempt Non-Profit Organizations

Read more

Advisor’s Plan Review Frequency Insufficient

Greenwald & Associates recently conducted research with 565 employers that have retirement...

Read more