Core Insights - A significant disconnect exists between Americans and their retirement savings, with 25% unable to name their retirement account provider [1][8] - The number of dormant workplace accounts has increased to over 30%, up from 21% in 2012, indicating a growing issue of "forgotten" accounts [1] Survey Findings - The survey conducted by PensionBee involved 1,000 U.S. retirement savers, revealing that 40% consult their account provider for questions, while only 4% use AI for retirement inquiries [8] - A large portion of respondents (31%) check their retirement accounts only once or twice a year, and 9% never review their allocation or do so every three years [8] - 55% of respondents have never consolidated old accounts, leading to fragmented savings across multiple providers [8] Risks of Inactivity - Inactive accounts face two major risks: asset misallocation, where portfolios may become misaligned with a saver’s risk tolerance, and automatic rollover of dormant accounts under $7,000 into Safe Harbor IRAs, which may not grow effectively [3][8] Company Overview - PensionBee is a leading retirement savings provider managing $10 billion in assets and serving over 300,000 customers globally, focusing on simplicity and transparency [5] - The company offers various IRA options, including Traditional, Roth, SEP, and Safe Harbor IRAs, with ETF-backed portfolios [5]

Core Insights - Nearly all credible personal finance experts recommend maximizing tax-privileged retirement accounts, but the median worker's income makes it challenging to do so [1] Contribution Limits - The IRS has set new contribution limits for various tax-advantaged accounts for 2026, including 401(k) plans at $24,500 plus $8,000 in catch-up contributions, an increase from $23,500 and $7,500 in 2025 [6] Saving Strategies - Middle-class workers need to adopt extreme budgeting strategies to save more than the recommended 30% of income on housing, with the FIRE (Financial Independence, Retire Early) approach being popular among frugal savers [4] - A three-pronged strategy is suggested for maximizing retirement funds: reducing lifestyle expenses, resisting lifestyle inflation, and redirecting savings into 401(k) plans [5] - Recommendations include investing bonuses and tax refunds into retirement accounts and front-loading contributions early in the year to benefit from compounding [8]

Core Insights - The U.S. retirement system reveals that a significant portion of workers are under-saving for retirement, with only one-third of non-retirees believing their savings plans are on track in 2023 [2] Retirement Savings Trends - A notable 14% of participants in defined contribution plans managed by Vanguard contributed the annual maximum for employee elective deferrals [3][9] - The annual maximum contribution is $23,500, increasing to $31,000 for individuals aged 50 and above, and potentially up to $34,750 for older workers due to the SECURE 2.0 Act [4] Contribution Patterns - Higher earners are more likely to reach the maximum contribution limits, with 49% of those earning over $150,000 annually hitting the max, compared to only 2% of those earning between $75,000 and $99,999 [6] - Even individuals with modest incomes can aim to maximize their 401(k) contributions to benefit from employer matching and compound interest [7][9] Compounding Benefits - The power of compounding returns emphasizes the importance of early and maximum contributions, as illustrated by a scenario where saving the maximum for five years could lead to over $2.8 million by age 65 if left to grow [8]

Core Insights - Nearly one in three workplace retirement accounts may be dormant, with over 30% of all 401(k) and 403(b) accounts potentially inactive [1][2][8] - The growth of dormant accounts has significantly outpaced active accounts, with dormant accounts increasing by 130% from 2012 to 2023, while active accounts grew by 44% [8] Key Findings - The number of dormant workplace retirement accounts doubled from 14.8 million in 2012 to 28 million in 2023, and is expected to reach 32.8 million by 2026 [8] - The percentage of funded workplace accounts that are dormant is projected to rise from 21% in 2012 to over 30% by the end of 2026 [8] - The average American worker's job changes more frequently, leading to a higher risk of "compounding loss" from forgotten accounts, with a small monthly fee potentially resulting in nearly $18,000 in lost wealth over a career [4] Regulatory Context - Under current SECURE 2.0 regulations, employers can automatically roll over "left-behind" accounts with balances under $7,000 into Safe Harbor IRAs, which may not keep pace with inflation [5][6] Recommendations - PensionBee suggests four immediate actions to safeguard retirement savings: find old accounts, consolidate them, review investment allocations, and automate contributions [9]

Core Insights - The article emphasizes the importance of maximizing contributions to tax-advantaged accounts, particularly 401(k), 403(b), and 457(b) plans, before the year-end deadline of December 31 [1][2]. Contribution Limits - For 2025, the contribution limit for 401(k) plans is set at $23,500 for employee salary deferrals. Individuals aged 50 to 59 can contribute an additional $7,500, totaling $31,000, while those aged 60 to 63 can contribute up to $34,750 with an enhanced catch-up limit of $11,250 [3]. Participation Rates - According to Vanguard's report, only 14% of participants maximized their 401(k) contributions last year, despite an average savings rate of 7.7% of paychecks, which is a record high [4]. Long-term Impact - The long-term financial implications of not maximizing contributions are significant. For instance, contributing $10,000 versus $24,500 over 10 years could result in a difference of approximately $132,000 versus $323,000, assuming a 6% annual return [5]. Employer Match - Research indicates that 25% of workplace savers are not contributing enough to receive their full employer match, effectively missing out on free money [6]. Behavioral Insights - The tendency to procrastinate, with the mindset of "I'll start in January," leads many to miss out on maximizing contributions, which can result in substantial financial losses over time [7]. Financial Growth Example - A 35-year-old who does not maximize contributions for just one year could miss out on approximately $134,000 by age 65, assuming a 6% annual growth rate. Missing five years of maximum contributions could lead to over half a million dollars in lost retirement savings [8].

Core Insights - The article emphasizes the importance of proactive wealth growth strategies for the upcoming year, encouraging individuals to take their investment journey seriously [1][2] Group 1: Investment Strategies - Marking deadlines for wealth-growing opportunities is crucial, such as maximizing retirement contributions for 2025, including 401(k) and 403(b) plans [3][4] - It is advised to contribute at least up to the employer match in retirement accounts to benefit from free money [4] - Diversified, low-cost index funds like those tracking the S&P 500 or Nasdaq-100 are recommended for appropriate investment in retirement accounts [4] - Contributions to health savings accounts (HSAs) are highlighted as a powerful investment tool, being tax-deductible and capable of growing tax-free [5] Group 2: Timing and Action - Investors are cautioned against waiting for the "perfect" time to invest, as the cost of inaction can outweigh the risks of starting with an imperfect strategy [6][7] - The article stresses that time in the market is more beneficial than trying to time the market, urging individuals to avoid being sidelined by market fears [7] Group 3: Financial Advisors - The importance of finding a trustworthy financial advisor is underscored, as not everyone is expected to have comprehensive knowledge of investing and financial markets [7]

Retirement Account Contribution Limits - The contribution limit for individual retirement accounts (IRAs) will increase to $7,500 in 2026, with a catch-up contribution limit of $1,100 for individuals aged 50 and older [2] - For Roth IRAs, the income limit for contributions will rise to between $153,000 and $168,000 for singles and heads of household, and between $242,000 and $252,000 for married couples filing jointly [3] - The contribution limit for 401(k), 403(b), 457 plans, and the federal Thrift Savings Plan will increase to $24,500, with an $8,000 catch-up for those aged 50 and older [4] Health Savings Accounts (HSAs) - The annual contribution limit for HSAs will increase to $4,400 for individuals and $8,750 for family coverage in 2026, with an additional $1,000 catch-up contribution for those aged 55 or older [6] Social Security Benefits - The Social Security Administration will implement a 2.8% cost-of-living adjustment (COLA) for 2026, resulting in an average increase of $56 per month for approximately 75 million retired seniors and disabled workers [8]

Core Insights - Contribution rates to workplace retirement plans are often set early in a career and may remain unchanged for years, significantly impacting long-term retirement readiness [2][4] - Most workers lack awareness of how their contribution rates compare to others, making it difficult to assess if they are on track for retirement [3][5] Contribution Rates by Age and Income - J.P. Morgan's 2025 report indicates that contribution rates increase with age: Gen Z averages 3.7%, Millennials 5.0%, Gen X 6.0%, and Baby Boomers just over 7%, all below the recommended 10% [6][9] - Higher earners contribute more, but even among top earners nearing retirement, average rates are under 9%, indicating a broader trend of insufficient contributions [8][11] Impact of Contribution Increases - A 1% increase in contribution rates can lead to significant long-term benefits; for example, a worker increasing from 5% to 8% in their mid-20s could accumulate about $84,000 more by retirement compared to someone who does not increase their rate [14][15] - Timing of contribution increases is crucial; a late increase yields much lower additional savings, highlighting the importance of early adjustments [15] Strategies for Improvement - Small, manageable increases in contribution rates are recommended, as they are easier to sustain and can have a meaningful long-term impact [16][19] - Automation of annual increases in contribution rates can help maintain consistent growth without requiring annual decision-making [17] - Ensuring full utilization of employer match programs can enhance total savings rates without significantly increasing personal contributions [18]

Core Insights - The article discusses the rules and implications of 401(k) withdrawals and loans, emphasizing the penalties for early withdrawals and the differences between traditional and Roth 401(k) accounts [1][3][4] 401(k) Withdrawals - A 401(k) withdrawal permanently removes funds from a retirement account, with penalties for early withdrawals before age 59 ½, typically incurring a 10% penalty plus taxes [3][10] - Traditional 401(k) withdrawals are taxed as ordinary income, and a 10% penalty applies if taken before age 59 ½ [4][5] - Roth 401(k) withdrawals can be tax-free if the account has been held for at least five years and the account holder is at least 59 ½ [7][8] - Early withdrawals from a Roth 401(k) incur taxes and penalties on the earnings portion of the balance [8] 401(k) Loans - A 401(k) loan allows borrowing against the retirement account, typically up to 50% of the vested balance or $50,000, with no taxes or penalties if repaid [12][13] - Repayment of a 401(k) loan is usually required within five years, and payments are often deducted from paychecks [13] - If employment ends, the repayment timeline for a 401(k) loan may be accelerated, posing a risk if the loan cannot be repaid [14][17] Exceptions to Penalties - Certain circumstances allow for penalty-free withdrawals, such as the Rule of 55, hardship distributions, and substantially equal periodic payments (SEPP) [15][16] - The Secure Act 2.0 introduces provisions for penalty-free emergency withdrawals and other exceptions for specific situations [15] Alternatives to Withdrawals - The article suggests considering alternatives to withdrawing or borrowing from a 401(k), such as using savings accounts, Roth IRAs, health savings accounts (HSAs), home equity, personal loans, or credit cards [16][18] - It emphasizes that taking money from a 401(k) should be a last resort due to potential penalties and lost investment growth [16] Contribution Limits - Individuals aged 50 and above can benefit from higher contribution limits to their 401(k), with additional contributions allowed in 2025 and 2026 [17][19]

Core Insights - The article emphasizes the importance of making strategic financial moves before the end of the year to enhance financial stability heading into 2026 [1][2] Group 1: Retirement Contributions - Increasing contributions to workplace retirement plans, such as 401(k)s or 403(b)s, can significantly reduce tax liabilities, with a contribution limit of $23,500 for 2025 [3][7] - For individual retirement accounts (IRAs), the deadline to maximize contributions extends until April 15, 2026 [4] Group 2: Tax Deductions - The "One Big, Beautiful Bill" Act (OBBA) introduces new tax provisions that may provide additional savings for eligible individuals, particularly seniors [8][9] - Seniors aged 65 and older can claim an additional $6,000 deduction on top of the standard deduction, which is $15,750 for single filers in 2025, allowing for a total deduction of up to $21,750, subject to income limits [10][11] - The SALT (State and Local Tax) deduction cap has been increased, allowing some taxpayers to deduct up to $40,000 from their income, with phase-out limits for higher earners [12][13] Group 3: Flexible Spending Accounts - It is advisable to utilize funds in flexible spending accounts (FSAs) before the end of the plan year, as these accounts operate on a "use-it-or-lose-it" basis [14][15]