Nine in 10 (92%) with access to an employer’s 401(k) plan are currently contributing to the plan. Seven in 10 (72%) said that saving for retirement is their top financial goal, followed by maintaining or improving their current lifestyle (50%), creating or adding to an emergency fund (36%), and paying off debt (34%).
However, approximately two-thirds (68%) of investors with access to a 401(k) plan are contributing 10% or less of their salaries, excluding any employer match, to their plan—lower than the previous T. Rowe Price research that recommends investors strive to save at least 15% to 20% of their annual income, including any employer contributions, in order to have a reasonable possibility of living comfortably in retirement.
When asked what percentage of their salaries they would ideally save for retirement each year, 42% of investors said a number less than the recommended minimum benchmark of 15%. Of equal concern, a little less than one-third (29%) of survey respondents were not sure how much they are currently contributing to their retirement plan.
“Although competing financial priorities make retirement saving difficult for many people, it’s encouraging that saving for retirement remains the top financial goal for investors aged 50 and under. However, the survey underscores the fact that many need to boost their retirement savings amount, and they also need to be more fully engaged in the savings process,” said Christine Fahlund, senior financial planner with T. Rowe Price.
The survey was conducted online August 8 to 20, 2012, among 850 adults ages 21 to 50 who have at least one investment account.