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A recent study by the Boston College Center for Retirement Research found that 50% of American workers are not on track to save enough to retire without reducing their standard of living. A National Institute on Retirement Security study on the retirement preparedness of American workers showed that:

• 1/3 between the ages of 55 and 64 haven’t saved anything for retirement.

• 38 million working-age households in the United States have yet to start saving for retirement.

• The average retirement savings for people 10 years away from retirement is $12,000.

Many studies, including a recent study by Fidelity, indicate that workers should save more, at least 15% of their income each year. It is likely that most of your 401k plan participants are not saving anything near this amount. Following are four ideas on how your 401k plan participants could save more:

How Your Participants Can Save More

1. Make a budget — now!

Almost anyone can save more and spend less by making a budget. Most participants I talk with have never created a household budget. When I ask them what they spend their money on, many say “it just goes.” If I ask them to be more specific, generally it is hard for them to share how they spend their money. Like most Americans, they live check-to-check. Many people are not financially confident or competent and the addition of a little structure, via a budget, can make a big difference in their lives.

2. Raise your 401k savings rate with each salary increase

The least painful way for most participants to gradually increase their savings rate is to increase it by at least 1% every time they get a raise. That way a portion of each raise is saved but a portion still flows through to their take home pay.

3. Collect the full company match

It may be hard to believe, but each client I work with has a sizeable employee population that is not making the maximum employee deferral in order to collect the maximum company match. This is an easy way for many participants to quickly double the impact of saving more.

4. Invest appropriately for your age and risk tolerance

I talk to many participants who “got started saving late” and want to make up for lost savings quickly by investing more aggressively. This is a bad savings and investment strategy which inevitably leads to failure. Make sure you advise your participants to gauge their risk tolerance by taking an assessment quiz. They should never, ever attempt to make up for lost time by investing more aggressively. Participants who do this are terrified when the markets fall, because of how much their account balance decreases.

Help your 401k participants save more by adding these savings tips to your next employee education sessions.


About the Author

Robert C. Lawton, AIF, CRPS is the founder and President of Lawton Retirement Plan Consultants, LLC. Mr. Lawton has over 30 years of retirement plan consulting and administration experience and has provided consulting services to many Fortune 500 companies including: Aon Hewitt, Apple Inc., AT&T, First Interstate Bank, Florida Power & Light, General Dynamics, Houghton Mifflin Harcourt, IBM, John Deere, Mazda Motor Car Company, Northwestern Mutual, Northern Trust Company, Trek Bikes, Tribune Company, Underwriters Labs and many others. Mr. Lawton may be contacted at (414) 828-4015 or

About Lawton Retirement Plan Consultants, LLC

Lawton Retirement Plan Consultants, LLC is a Milwaukee, Wisconsin-based independent, objective Registered Investment Advisory (RIA) firm providing investment advisory, fiduciary compliance, employee education, vendor management and plan design services to 401(k) plan sponsors. The firm currently has contracts in place to provide consulting services on more than $400 million in plan assets. For more information, please contact Robert C. Lawton at (414) 828-4015 or or visit the firm’s website at: Lawton Retirement Plan Consultants, LLC is a Wisconsin Registered Investment Adviser.

Important Disclosures

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance, tax, legal or investment advice. Each plan has unique requirements and you should consult your attorney or tax adviser for guidance on your specific situation. In no way does Lawton Retirement Plan Consultants, LLC assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations. Investors should carefully consider investment objectives, risks, charges and expenses. The statements in this publication are the opinions and beliefs of the commentator expressed when the commentary was made and are not intended to represent that person’s opinions and beliefs at any other time. The commentary does not necessarily reflect the opinion of Lawton Retirement Plan Consultants, LLC and should not be construed as recommendations or investment advice. Lawton Retirement Plan Consultants, LLC offers no tax, legal or accounting advice and any advice contained herein is not specific to any individual, entity or retirement plan, but rather general in nature and, therefore, should not be relied upon for specific investment situations. Lawton Retirement Plan Consultants, LLC is a Wisconsin Registered Investment Adviser and accepts clients outside of Wisconsin based upon applicable state registration regulations and the “de minimus” exception.