Trick yourself into boosting 401(k) contributions

  @Money August 15, 2013: 5:28 PM ET
401k savings

Employees who got income forecasts and changed their contributions set aside $1,150 a year more than did those who didn't get a pamphlet.

(Money Magazine)

Looking for a way to spur your savings? Calculate how much income you'll be able to draw from your 401(k) when you retire.

That's the takeaway from a recent study in which workers received brochures showing how raising their 401(k) contributions would increase their retirement income. The employees who got income forecasts and changed their contributions set aside $1,150 a year more than did those who didn't get a pamphlet.

"For some people the projections helped overcome the tendency to procrastinate about saving," says study co-author Gopi Shah Goda, senior researcher at Stanford.

Related: How much are 401(k) fees costing you?

The U.S. Labor Department in May asked for comments on new rules that would require 401(k) plans to give workers retirement income projections; a MetLife study found 28% of large plans do. You can also run the numbers for yourself on T. Rowe Price's retirement income calculator.

Are your money market savings safe?

After earlier efforts to make money-market funds safer stalled, the Securities and Exchange Commission proposed a limited set of reforms in June.

One SEC proposal for money funds held by individuals: To head off mass withdrawals in financial crises, funds could add a 2% distribution fee. They could even block all withdrawals for up to a month.

How 401(k) fees eat away at your savings

But a requirement that money funds keep a cash cushion -- suggested by a presidential working group and previously floated at the SEC -- has been dropped.

Related: How fast will my retirement savings grow?

The SEC's plan won't make money funds safer -- especially those that are stretching for yield, says University of Mississippi securities law professor Mercer Bullard.

Your best bet in another meltdown? Have cash in FDIC-insured accounts. To top of page

Send a letter to the editor about this story to money_letters@moneymail.com.


Be inspired to save
See how your savings rate translates into retirement income.
Savings rate Monthly income starting at age 65 for a 40-year-old earning $100,000
10% $2,685
12% $2,938
15% $3,346
Notes: Assumes 30-year retirement at age 65, 401(k) balance of $200,000 at age 40. Excludes Social Security. Source: T. Rowe Price
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