A CNBC Your Money Survey found 74% of Americans feel financial stress, up from 70% in April. Financial strain makes it hard for many to fund a retirement plan.
The average company match in a 401 plan was 4.7% of a worker's salary in the second quarter of 2023, according to Fidelity, the nation's largest 401 plan provider. The average default contribution rate for auto-enrolled employees reached 4.1% in that quarter, which is the highest Fidelity said it has seen.Once they've stashed away their 401 savings, workers' understanding of where their money is going is mixed.
Still, the majority — 56% — admit they are not on track with their yearly 401 savings to retire comfortably, while some 42% say they are on track for a comfortable retirement.Save enough to get the employer match: Most financial advisors recommend contributing at least enough to a 401 to receive the employer match. "If you're a person making $50,000 a year, [a] 6% match is $3,000 — that's huge," said certified financial planner Malcolm Ethridge, executive vice president at CIC Wealth Management in Rockville, Maryland.Having cash that you can get to quickly is critical, financial advisors say.
Lawrence recommends trying to save three to six months' worth of living expenses in a liquid and easily accessible account. Some high-yield savings accounts let youStashing away less than the maximum employee contribution limit, or sometimes even less than is needed to get the company's matching contribution, makes sense to some financial advisors, especially if paying off high-interest debt helps reduce your financial stress.
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