The Retirement Equation
TOTAL CONTRIBUTIONS + INVESTMENT GAINS – WITHDRAWALS = BALANCE AT RETIREMENT
A 2014 study by MFS surveyed 1,000 defined contribution plan participants in the U.S. between the ages of 20 and 69 who are employed and have at least a $1,000 balance in a plan with their current employer. They asked questions about total contributions, investment gains and withdrawals.
Participant perspective: Amount needed to save for retirement.
Most participants see $1 million in retirement savings as enough to live comfortably in retirement; 68% believe this amount is enough or more than enough.
Saving $1 million for retirement at age 65, would give you:
Participant perspective: Importance of returns.
Participants see returns as having a major positive impact on their plan balance but don’t understand the importance of timing returns.
Half of participants who take 401(k) loans use them to pay off debt. Nearly one-quarter of borrowers say they had other options, yet tapped their 401(k) anyway.
Loans were used for:
This article is an excerpt from MFS’ white paper, The Retirement Equation. Results of MFS’ 2014 DC Pulse Survey.