There are promising trends in fourth-quarter retirement fund reports. With efforts to save increasing, efforts to protect funds require renewed attention too.
New Efforts To Save
As businesses and employees across the country grind through a difficult winter, the news from Fidelity’s fourth quarter 2020 Retirement Analysis is uplifting. Many indicators point to how focused employees are on saving.
The number of “401k millionaires” at Fidelity rose from 101,000 at the end of 2019, to 334,000 at the end of 2020. Gen Z workers got busy saving—the average balance of 401k savings for this group hit $5,800. Despite the unique disruptions faced by women during the pandemic, women’s retirement savings rose too.
Fidelity’s 2020 Retirement Analysis is based on more than 30 million 401k, 403b and IRA retirement accounts. 401k Specialist reports these highlights:
- One-third of 401k savers increased their savings rate in 2020.
- The average 401k balance increased to $121,500 in Q4, an 11% increase from Q3 and up from 8% from a year ago.
- Despite the ongoing financial uncertainty, individuals continued to save in their workplace savings accounts. The average quarterly savings rate for 401k accounts reached 9.1%….
- Women are saving more for retirement than ever before, with the average 401k savings rate for women climbing to a record 9%, up from 8.7% a year ago.
In a Pinch: Savings Come In Handy
Though no one likes having to dip into retirement savings, the ability to do so proved vital during the pandemic. Fidelity’s analysis, for example, found:
From March to the end of 2020, 1.6 million individuals had taken a CARES Act distribution from their retirement account, which represents 6.3% of eligible employees on Fidelity’s workplace savings platform. The majority of individuals (59%) took one withdrawal in 2020 and the overall average amount per withdrawal was $9,400 (the median amount per withdrawal was $2,500).
The ability to use retirement savings may be especially useful to those over the age of 72 in the year ahead. They have required minimal withdrawals in 2021, now that the freeze established by the CARES Act has ended. Budgeting to use these funds might be helpful as disruptions continue to impact life across the country.
Trending Now: Increased Risk Management
Turbulent times have underscored the importance of saving—making the 401(k) retirement plan that your business provides employees ever more important and valuable. Protecting the plan, the business, and fiduciaries—like yourself—is also critically important.
Think about all the ways your liability exposure has intensified this past year. To name a few examples: there’s access to the plan by employees and service providers suddenly working remotely; regulatory changes; and, increased market volatility. All of these increase the risks for fiduciary and cyber breaches.
Let Colonial Surety Company help you step up your risk management efforts. As a leading national provider of ERISA Bonds, Colonial offers plan sponsors the opportunity to add Fiduciary Liability coverage affordably and efficiently. With a 2-3 your coverage package, we even include Cyber Liability coverage to protect the pension plan and the business from cyber breaches.
Affordably protect your retirement plan, yourself as a fiduciary and your company with Colonial’s three-point coverage package created especially for plan sponsors:
- the required ERISA bond protects the assets of the retirement plan from theft;
- Fiduciary Liability coverage protects you and your assets from personal liability; and,
- Cyber Liability coverage can safeguard your company and plan from covered losses and expenses in the event of a cyber breach.
Challenging Times for Plan Sponsors
Challenges to plan fiduciaries in large and small companies are on the rise. Keep in mind, any individual involved in the management of a retirement plan (e.g., you) can face personal exposure for breach of a fiduciary duty. Even allegations of a fiduciary breach can result in costly ERISA litigation, diverting attention and resources from your work—and life. An important step in risk management is securing coverage
Colonial Surety Company’s ERISA bond package provides plan sponsors up to $1,000,000 of fiduciary liability insurance. Secure the greatest overall savings and protection with our 2-3 year packages. Colonial even includes extended coverage to ensure your ERISA bond remains US Department of Labor compliant.
Colonial’s friendly online platform provides helpful videos, and enables you to easily choose, quote and purchase your complete coverage package.
Colonial Surety Company is in business all across the USA. We are rated “A Excellent” by A.M. Best Company and U.S. Treasury listed.