40% are reducing 401(k) contributions
Uncertainty with the economy and other factors like inflation are cause people to contribute less to their 401(k) according to a recent Morgan Stanley survey. In fact they foun 4 out of 10 are reducing their contributions.
Reports like this and other similar findings elsewhere cause a few things to jump off the page for me.
The Future Poor: Reducing savings doesn’t help the situation! We know this to be true but that is not the place many find themselves. We require more money now than we did last year for the exact same life. This highlights that the trajectory of retiring at 65 is not the right model for our financial futures.
Behavioral/moral situation people need to try harder: Everyone will tell you that the solution to retirement is on you. If you don’t make it, you are the problem. This sentiment is widespread and shameful. It takes complicated realities and makes them a matter of your own behavioral approach and then go further to making them a personal moral failure on your part. Many find themselves deciding between groceries or retirement savings.
Continuing decline of the 401(k) world: I believe the retirement industry is on life support because it is still trying to solve what may not be possible and may not exist anymore - retire at 65. Currently it is a $40 trillion industry but that doesn’t mean it will stay that way. Massive distributions of these accounts, less funding into them and the end of retirement all spell doom for this once mighty industry.
You can take a look at the article and the Morgan Stanley findings.
As always, if you come across a financially related article you’d like to send my way please do!
Best place to send them is to me.
More next time!
Jonathan