If you can shop online, you can add to your retirement savings!

Since their introduction over 30 years ago, 401(k) plans have grown to become a very popular way for employees to save for retirement; and these plans currently hold trillions of dollars in assets. Despite the popularity of these plans, most employees are not saving as much as they should. Many Americans save only 3% or less of their earnings, although experts recommend saving at least 10%. It is easy for an advisor to suggest saving 10%; it is not so easy for employees to invest so much of their paychecks in a plan that places restrictions on withdrawls.

Enter SaverNation. By enrolling with SaverNation, employees do not have to set aside money in advance from gross income, but they can get money added to their 401(k) accounts with almost every purchase they make. When an employee makes an online purchase at a participating merchant, the employee gets 1% to 25% of the purchase added to the employee’s checking account. There are over 600 merchants participating in the plan offering an average of 5% cash back – Sears, Target, Walmart, J. Crew, Apple, Old Navy – to name just a few. That is 5% of a purchase that was going to be made anyway for apparel, books, gifts, health & beauty, electronics, etc. SaverNation deposits this cash to the employee’s checking account and instructs the employer to withhold the same amount from the participant’s paycheck as a pre-tax contribution to the employee’s 401(k) account. This contribution is in addition to any regular payroll deduction that is currently made. SaverNation gives employees cash back for making their normal purchases and the cash can be added to retirement savings.

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“The question isn’t at what age I want to retire, it’s at what income.” These words of wisdom from boxing great, George Forman, are as timely today as they were when Forman was in the ring.

Most Americans need help saving for retirement. Too many place only 3% of their earnings into 401(k) plans, although experts recommend saving 10% or more. One retirement program feature that has proven effective in increasing employee participation is automatic enrollment. In contrast to some plans in which employees must elect to participate, automatic enrollment plans assume that employees want to participate; they are enrolled unless they notify their employer that they do not want to be enrolled. The automatic enrollment feature has significantly increased participation in retirement plans with some research showing participation levels at 82% compared to only 55% for programs without this feature.

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Congress is wrestling with year-end budget issues and trying to reduce the trillion dollar deficit with a series of tax hikes and spending cuts. While nothing has yet been agreed to, some proposals that have been made involve reducing retirement plan deductions, possibly by as much as 60%.

Over 60 million Americans participate in a 401(k) plan or some other form of employer sponsored retirement plan. Even with employer plans, many Americans place only 3% of their earnings into 401(k) plans, although most experts recommend saving 10% or more. While many individuals are not saving as much as they should, their retirement plans represent more than 65% of their entire financial assets. For most individuals,the employer programs provide the incentive and discipline they need to save for retirement. Without these employer plans, most Americans would not save for retirement.

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