A new survey from the Employee Benefits Research Institute and reported in the Wall Street Journal found that 0.2 p
ercent of 401(k) participants have reached $1 million in savings in their 401(k) plans. They keys to this success? Consistent saving over at least 20 years and contributing high amounts – if possible, the maximum annual amount allowed (this year it is $17,000).
Certainly, not everybody has the means to save $17,000 a year. But what is more important is being consistent with a smaller amount. That means not going into panic mode and withholding contributions to your account when the market tanks (see my
analysis of the 2008 crash and a 2011 follow-up). Of particular importance is saving enough to receive your full employer match (if your employer matches your contributions). Not doing this is like turning down a pay raise. And don’t forget the tax advantages of saving in a regular tax-deferred or Roth 401(k). For more discussion on working toward a secure retirement, see my publication on common mistakes made by savers.
I may sound like a broken record (or a scratched DVD) on the topic of retirement saving since I have written about it many times, but this is why I do: regardless of what Congress does to Social Security now or in the future, personal saving is an absolute necessity to a secure retirement and one of the areas in which we as individuals have some control. Happy saving in 2012!