With the unemployment rate declining and the economy looking relatively strong, more and more workers are saving money for the future. This is good news for anyone who may be worried about bankruptcy as they try to figure out ways to manage their debts.
Fidelity Investments, one of the world’s largest mutual fund and financial services groups, recently conducted a survey of households with millennials who are currently part of the workforce. Fidelity’s survey examined many factors, including worker income, spending rates, and savings rates, and also factored in when the workers planned to retire. Survey results showed that 45 percent of current members of the workforce are in a financial position to cover their “essential expenses” after retiring. This number is up approximately seven percent from 2014, indicating that workers are becoming better at planning for the future in advance of reaching retirement age.
There are a number of reasons for the increase in the number of millennials who are saving for their later years, according to John Sweeney, the executive vice president of retirement and investment strategies for Fidelity Investments. Some of the reasons for the rise in retirement savings by workers today include:
- Improved Economy: The economic recession appears to be over, with the U.S. job market and the economy steadily improving since 2008. In fact, unemployment is at its lowest figure since 2008. As a result of the improving economic situation in this country, more and more employees are beginning to feel good about their financial status.
- Target-Date Funds for Retirement Plans: Many millennials are now being automatically enrolled in target-date 401(k) plans and other mutual funds, meaning that their contributions are invested in a mix of stocks, bonds, and cash equivalents in accordance with a certain timeframe. Importantly, that timeframe is determined by the age of the worker and their expected date of retirement. As the worker nears retirement age, the investment portfolio would likely be shifted to more conservative ventures. The end result is that workers are saving more money in preparation for retirement and a graceful exit from the workforce.
For additional information, read the Yahoo.com article, “Workers Are Saving More for Retirement, Led by Millennials.”