Make America Saves Week an Annual Incentive to Boost Savings

Even small increases today can lead to big increases in retirement income when done on a regular basis, especially for young savers.

BOSTON — When it comes to retirement savings, time can be on your side. Thanks to the power of compounding interest, the longer someone saves, the more likely they'll achieve their retirement readiness goals. During America Saves Week (link), an annual campaign, Fidelity urges people to start saving as early as possible, and if they can, increase savings each year during the campaign, even if only by a small amount. This ritual could reward people in the future, especially young savers.

"It's encouraging to see America Saves Week and the '1% More' initiative helping to boost retirement savings in IRAs and 401(k) plans," said Jeanne Thompson, vice president, Fidelity Investments. "In fact, one quarter1 of 401(k) investors increased their savings rate last year2. We suggest people save at least 15 percent of their salary annually for retirement. Taking advantage of a company match and workplace programs such as automatic annual increase, which raises savings one percent each year, can help people achieve this goal."

Last year during America Saves Week, Fidelity examined the benefit of increasing 401(k) or 403(b) savings by just one percent for people ages 25 to 55. Each age example saw additional estimated monthly retirement income, especially the 25-year-old. This year Fidelity took the analysis a step further, studying three increase scenarios to demonstrate the power of establishing ongoing savings rituals when young (image).

First, a 25-year-old earning $40,000 who increases their deferral this year by one percent could receive additional income in retirement of $190 per month3. But what if they saved an additional one percent more often?

Millennials4 will have a lot of expenses during their working lives, such as saving for a home, paying off student debt or unexpected health care costs. With this in mind, Fidelity studied the benefit of increasing savings by one percent every five years – maybe when people get a raise or higher-paying job – for a total increase of five percent over 25 years. Those who adopt this pattern could receive $690 more in monthly retirement income5.

The impact is even greater if a 25-year-old begins a savings ritual where they increase their deferral by one percent annually during America Saves Week, for a total of 12 increases. Under this scenario, they could receive $1,930 per month in extra retirement income6.

"We know life is expensive and people have competing financial pressures," said John Sweeney, executive vice president at Fidelity. "This research clearly demonstrates the impact making small savings improvements can have on a young person's retirement funding. The more regularly you can set aside money from your paycheck at an early age, the more grateful you may be when you retire."

Education to Help People Build Financial Confidence

Fidelity offers a range of financial education to help people make decisions around retirement savings, budgeting, managing debt, college savings and how to prepare for the escalating costs of health care. Individuals can receive tips and information at workplace education meetings, from phone representatives, through on-demand webinars and in-person at Fidelity's investor centers nationwide.

From Millennials to pre-retirees, many people prefer to access educational content on- the-go. Fidelity's workplace participant experience, NetBenefits®, and other help is available over smartphones, tablets and home computers at the time that works best for the individual. Educational information may also be found on and Fidelity's Twitter, Facebook and YouTube channels.

Additional Resources to Help Americans Understand the Power of Saving

  • Join the conversation tomorrow with Jeanne and John during Fidelity's Twitter Chat on Tuesday, February 23 from 2:00-3:00 p.m. ET by following #AutoSave16,
  • @Jeanne_Fidelity, @SweeneyFidelity or @Fidelity. Register for the Empowering ConversationsSM Webcast on March 8 to help women learn to prepare for the unexpected (link).
  • Learn your Retirement ScoreSM, an estimate of your ability to cover expenses in retirement (link).
  • Have a child working? Give them a jumpstart on retirement saving and help them learn the power of compounding by opening a Roth IRA for Kids (link).
  • Want to take the guesswork out of maintaining an aged-based retirement portfolio? Consider a target date fund such as a Fidelity Freedom® Fund (link)7.
  • Visit Fidelity Viewpoints® for education on college savings, paying off debt, Social Security, health care and how one percent more can make a big difference (link).

About Fidelity Investments

Fidelity's goal is to make financial expertise broadly accessible and effective in helping people live the lives they want. With assets under administration of $5.2 trillion, including managed assets of $2.0 trillion as of December 31, 2015, we focus on meeting the unique needs of a diverse set of customers: helping more than 24 million people invest their own life savings, nearly 20,000 businesses manage employee benefit programs, as well as providing nearly 10,000 advisory firms with technology solutions to invest their own clients’ money. Privately held for nearly 70 years, Fidelity employs 42,000 associates who are focused on the long-term success of our customers. For more information about Fidelity Investments, visit

1. 24.3%
2. Fidelity Workplace Investing data as of Dec. 31, 2015.
3. Hypothetical examples assume that the individual saves according to the described scenarios until retirement age 67, lives through age 93, and receives a 1.5% real (inflation-adjusted) increase in wages per year. Rate of return is 5.5% and consists of 3.0% real return and 2.5% inflation. Estimated increases in retirement monthly income are in constant 2016 dollars. It is assumed that upon retirement the real dollar amount is withdrawn annually through age 93, and that the participant took no loans or hardship withdrawals from his or her workplace plan. The maximum annual qualified 401(k) retirement plan employee contribution limit in 2016 is $18,000 (or $24,000 if age is 50 or older). All dollars shown (including increases to monthly retirement paycheck) are pretax dollars. Upon distribution, applicable federal, state and local taxes are due. No federal, state or local taxes; inflation; account fees or expenses were considered. If they were, returns and monthly increases would be lower. All scenarios assume starting age 25, starting salary $40,000.
4. Millennials are defined as those people born between 1981-1997.
5. Ibid 2
6. Ibid 2
7. Fidelity Freedom Funds are designed for investors who anticipate retiring in or within a few years of the fund's target retirement year at or around age 65 and plan to gradually withdraw the value of their account in the fund over time. The funds' asset allocation strategy becomes increasingly conservative as the funds approach the target date and beyond. Ultimately, the funds are expected to merge with the Freedom Income Fund. The investment risk of each Freedom Fund changes over time as the fund's asset allocation changes. These risks are subject to the asset allocation decisions of the investment adviser. Pursuant to the adviser's ability to use an active asset allocation strategy for the Freedom Funds, investors may be subject to a different risk profile compared to the fund's neutral asset allocation strategy shown in its glide path. The funds are subject to the volatility of the financial markets, including that of equity and fixed income investments in the U.S. and abroad, and may be subject to risks associated with investing in high-yield, small-cap, commodity-linked, and foreign securities. No target date fund is considered a complete retirement program and there is no guarantee any single fund will provide sufficient retirement income at or through retirement. Principal invested is not guaranteed at any time, including at or after the funds' target dates.
Before investing in any mutual fund, consider the investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.
Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.
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