Anne Tergesen
speaker
4,485 appearances
83 recordings
1 series
first heard Jul 2017
last heard Feb 2025
Anne Tergesen’s voice in public audio — every appearance, attributed to the second.
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Appearances
If every time you start a new job, you're thrown back to that 3% savings rate under automatic enrollment, often employers will automatically increase people's savings rate by one percentage point a year.
But it's just going to take you a long time to get to that ideal 12% to 15% if every time you leave one employer to go to another, your savings rate declines.
Vanguard did an estimate of what would happen to somebody who switched jobs eight times, and each time they switched, their savings rate went back to 3%, which is the most common savings rate under automatic enrollment.
And they found that for somebody earning like about an average salary of $60,000 at age 25, they found that over a 40-year career, this can
mean that they'd save about $300,000 less than they would have had they gone in at 3%, increased by one percentage point a year until reaching that ideal level.
Either the employer or the 401k record keeper will send emails sort of nudging people, hey, you might want to take a look at your savings rate.
It doesn't mean that all employers do that, but these days probably quite a few do.
It's looking like about two and a half percent for next year, which is significantly lower than we've seen in a while, but yet also reflects the fact that inflation is lower than it's been in a while.
It is calculated based on a consumer price index for urban workers, to be specific.
But the one that they look at is the July, August, and September data.
And we just had the August data come out.
And so we can get a pretty good sense of what that COLA is going to be.
Nonprofits that follow this are saying it's looking like about 2.5% for next year, which is significantly lower than we've seen in a while, but yet also reflects the fact that inflation is lower than it's been in a while.
I calculated that for the average Social Security check, which is about $1,900, a little more than that currently.
And based on a 2.5% COLA, I think the average person would see about a $50 a month increase.
Starting in January.
Right.
So people get really confused by this.
I mean, in fact, if prices were to come down, it would be a sign of economic weakness.
In fact, an economist I spoke to said, you know, if we get broad based, what they call deflation, when prices come down, that often is a sign of an economic weakness.
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