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Financial Resolutions for 401k Participants in 2019

Financial Resolutions

Financial Resolutions for 401k Participants in 2019

Financial Resolutions for 401k Participants are a high priority this year.  During every New Year the conversation gravitates toward financial resolutions for 401k participants. And this year is no exception.  This is the time of year when setting goals for next year is on many people’s minds, including your retirement plan participants. Your retirement plan participants may be resolving to get a better handle on their finances in 2019, and many of them could use your help getting started and staying on track.

Financial resolutions are making a comeback, according to Fidelity Investments’ Tenth Annual New Year Financial Resolutions study. This year, 32% of respondents said they’re considering a financial resolution for the coming year, compared to 27% last year — which was an all-time low. Perhaps not so surprising are  Americans’ top three financial resolutions — saving more (48%), paying down debt (29%), and spending less (15%) — are the same ones they have been making for 10 years running. Considering that 40% of U.S. adults don’t have enough money saved to cover a $400 emergency, and the average American household carries $137,063 in debt, according to Federal Reserve data, it’s no wonder these three categories consistently top the resolutions list year after year.

Despite these bleak statistics, Americans are feeling optimistic about their finances heading into 2019. For the fourth consecutive year, 87% say they are in a similar or better financial situation than last year. That’s up from 2012, when only 73% had a positive view of their financial situation. The top reasons people feel better include:

  • 55% say they or someone in their family is saving more money
  • 53% are getting on a budget
  • 44% report they or someone in their family received a new job or promotion
  • 44% say they paid down debt

In light of these revelations, three out of four Americans predict they’ll be better off financially in 2019 than they were in 2018. Interestingly, younger generations feel better about their financial situation than older generations: 85% of millennials predict they will be better off financially in 2019, vs. 80% of Generation X and 67% of boomers.

Additionally, Americans’ risk tolerance seems to be holding steady. When asked in 2018 if their risk tolerance increased, decreased or remained the same after the markets tumbled in 2009, 57% said it remained the same, compared to 53% who answered the same question in 2009. According to Fidelity, the results demonstrated that Americans are more confident today in investing for the long term than they were nine years ago.

When it comes to keeping New Year’s financial resolutions, Americans do well.  In 2018, 27% of Americans had a financial resolution, and 74% of them stuck with it. Those who choose to make New Year’s financial resolutions may have more success staying on track by avoiding common mistakes — 58% admitted to falling prey to at least one of these financial pitfalls in 2018:

  • 28% dined out too much
  • 18% neglected to return or exchange unwanted purchases
  • 18% paid too much in fees like ATM, financial account or transaction fees, credit cards or late payments
  • 19% splurged on something they really couldn’t afford
  • 18% continued to pay for unused subscriptions, like apps, subscription retail boxes, or streaming media services
  • 5% took a vacation they couldn’t really afford

Making — and keeping — good spending and savings habits is key to achieving financial well-being. We know that most people want, and need, help when it comes to improving their financial behaviors. As we wrote recently, employees desire help when it comes to getting financial advice about everything from saving for retirement to funding healthcare expenses today and in their post-work years. With New Year’s resolutions on the brain, and many people resolving to improve their finances in 2019, now may be the perfect time to introduce or re-up financial education and wellness programs that can help your employees get a handle on their financial situation in the coming year.

Consider what programs can you implement to help employees make better financial decisions? Determine how you can you help employees to improve their decision-making process? Are your current educational offerings enough to get the job done, or is there room for improvement? Being proactive around these questions and topics and making any necessary changes to your financial education and wellness programs going into the new year can help put your employees on the fast track to financial success during 2019. Therefore, Financial Resolutions for 401k Participants should be a high priority this year.  With the new year upon us, now is the time for Plan Sponsors to take action.

Robyn Kurdek

Robyn Kurdek

Freelance writer with nearly 2 decades of financial industry experience, with niche expertise in the defined contribution (DC) industry. I also have defined benefit (DB) plan knowledge. I write all types of content for retirement plan participants, sponsors and advisors, including web copy, newsletters, white papers, fact sheets, blog posts, financial wellness articles, and more. "I speak DC."
Robyn Kurdek
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