According to American Century Investments’ annual National Plan Participant Study, 90 percent of U.S. employees feel at least some regret about saving for their future. Among the 1,500 full-time workers surveyed for the study, more than half feel that not saving enough is one of the greatest mistakes of their lives.
RewardExpert spoke with American Century Investments’ Vice President of Client Marketing, Diane Gallagher, about the investment management firm’s history and services offered as well as steps everyone should take to avoid experiencing financial regrets of their own.
Helping Clients Reach Their Financial Goals
American Century Investments was founded in 1958 by James Stowers, Jr. “Mr. Stowers’ beliefs were firmly rooted in the idea that if we make our clients successful, we’ll be successful as well. He established a business dedicated to integrity, performance, and client service,” Gallagher explained.
She said the company has grown from a small firm with two funds, three employees, and 24 clients into a leading privately held investment management organization with 1,300 employees and offices in New York, London, Hong Kong, and Mountain View, California, in addition to its headquarters in Kansas City, Missouri.
“Today, we have a client base of investment professionals, large institutional investors, endowments, foundations, and individuals,” Gallagher noted. “We help folks reach financial goals such as saving for retirement and sending their kids to college as well as manage corporate assets.”
The firm’s products and services for individuals include mutual funds and other investment vehicles, retirement accounts (including traditional IRAs, Roth IRAs, and Rollover IRAs), college investing accounts, and individual, joint, and personal trust accounts.
Overcoming Common Savings Barriers
While the Annual National Plan Participant Study found that most employees feel at least some regret about saving for their future, it also revealed that more than 40 percent of pre-retirees rank retirement as their biggest financial goal. Gallagher said the disconnect is likely due to “life getting in the way.”
“I’ve seen so many parallels between saving for retirement and doing other good things like eating right and exercising,” she explained. “We know what we should do, but actually doing it is not always the same thing.”
Common barriers to saving for retirement identified by survey participants included not earning enough money to save, having to pay off debts, and incurring unexpected expenses.
“Unexpected expenses are things like the transmission going out on your car, or a leaking roof or plumbing problem in your home,” Gallagher added. “Those immediate daily-life problems always seem to win out over saving.”
Making Saving a Habit
Fortunately, there are steps you can take to get back on track with saving for retirement or make a solid start—no matter how far along you are in your career.
For those just beginning their professional lives, Gallagher recommends contributing to a retirement account with your very first paycheck.
“One of the things we learned from the study was that people have more regret about failing to save over the first five years they were working than over any other period of time,” she said.
The survey also revealed that employees participating in employer-sponsored retirement plans such as 401(k)s love the efficiency and effectiveness of saving automatically.
“In an automatic payroll-deduction plan like a 401(k), they don’t have to write a check or remember to transfer funds,” Gallagher said. “Their savings happen by default.”
For professionals who are self-employed or don’t have access to a 401(k) through their employer, she recommends setting up a SEP Plan or an automatic investment IRA.
“A simplified employee pension plan can work well for self-employed individuals,” Gallagher noted. “And anyone can set up an automatic investment IRA where funds go into savings right from your checking account. It’s important to avoid having that money hit your physical wallet where you’re more likely to spend it.”
Finally, for those who are struggling to find enough money to save, she suggests carefully tracking spending for a month before setting a household budget.
“Write down every nickel you earn and every nickel you spend,” Gallagher said. “There are tons of apps to help you do that, but a piece of paper and a pencil will work just as well. When you know where your money has been going, you can find places where you can make a change.”
To learn more about retirement investment options and American Century Investments, visit www.americancentury.com or give one of the firm’s consultants a call at 1-800-345-2021.