Savings Are Up, But Employees Want More Financial Advice
The state of personal finance continues to evolve in the United States, as the financial crisis deepened the average person’s awareness to save, and at the same time decimated the retirement accounts of many.
According to an analysis released by Fidelity Investments, the total amount in retirement accounts through their services has increased, inching back towards pre-recession levels. In 2012, the average retirement savings account at Fidelity reached $81,100 — a five year high based on over 7 million accounts surveyed. In 2008 the accounts had taken their worst blow, falling to an average value of just under $53,000.
With the massive gains in stocks due in large part to low treasury rates resulting from the Fed’s quantitative easing policy, those savers and investors most exposed to these equities saw the greatest gains. This demographic tends to include young workers whose appetite for risk is larger than that of their elder counterparts. As people near retirement, or manage assets in retirement, the tolerance for risk is much lower. Retirement account balances for those workers in their thirties doubled in the last five years to a value of more than $20,000; while people over 70 saw their gains advance the slowest, with the average value up to $164,300 from $110,500.
Bank of America also released a comprehensive report recently looking into to the finer relationship of employee savings and how firms structure savings options for their workers. Some of the more revealing findings include an increase of funds being allocated to medical savings accounts, a tolerance among young workers for an automatic 5 percent contribution to 401 (NYSE:K) accounts, and most fundamentally, employees are looking to their employers for increased access to investment experts.
In a statement, Kevin Crain, head of Institutional Retirement and Benefit Services for Bank of America Merrill Lynch, said that, “Corporate benefit leaders, the retirement services industry and legislators must continue to work together to improve and protect the effectiveness and health of our country’s retirement system. We see many employers actively working to empower employees to take greater control of their financial success, as well as enhancing their financial benefits to ensure they are results-based, easy to use and encourage healthy behaviors.”
Two-thirds of people surveyed by Bank of America indicate that their retirement savings have increased in the last five years, with a whopping 85 percent feeling that they are not saving enough. Helping to explain the latter response was a question which asked recipients what they would do if they were given a $1000 bonus from their employer. The response: a majority of 36 percent said that they would use it to pay down debt, an indication that many workers are putting of savings while coping with various forms of other financial obligations.
Providing a bit of advice to businesses looking to make sense of this trend, Crain said that, “A company culture known for making investments in their employees’ financial wellness, in addition to their professional growth, will attract top talent and foster a more productive and loyal workforce, more deeply invested in the company’s success.”
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