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For years an afterthought to many workers, saving for retirement – including direct contribution plans like 401(k)’s – has become a bigger priority for many people. Now that many companies offer automatic enrollment in these programs for their employees, the direct contribution market is expected to double to nearly $8 billion in assets nationwide by 2015. That’s all well and good, but why should this matter to YOU?

While many of us are just getting our feet wet in the working world and retirement couldn’t be further from the front of our minds, there are numerous reasons to be invested in your retirement options early. For one, Social Security isn’t on the most stable ground and for the early 20’s crowd like us, counting on that to be around and substantial enough to fuel our retirement seems like a risky gamble at this point.

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Secondly, you can actually borrow against and take money from retirement plans early to help pay off other debts. While this isn’t always the most advisable strategy, and something you would always want to consult a financial advisor on, it can be a useful source of cash to eliminate pesky other debts (like student loans) and then begin rebuilding the losses in your 401(k) afterward.

According to a recent study conducted:

“The changing and expanding market should be good news for beleaguered consumers, forced to increasingly fund their own retirements in an era of vanishing pensions and shrinking Social Security funds. [The study] says the increased options bring not only a wider range of choices but more opportunities to obtain investment-related advice and invest in lower-fee funds.”

Congress has also played a role in increasing the effectiveness of 401(k) type plans by passing legislation in 2006 to eliminate barriers to enrollment.

“Congress helped spur defined-contribution plans’ growth in 2006 with the Pension Protection Act. The act removed barriers that prevented companies from automatically enrolling their employees and also increased employees’ access to professional advice about investing for retirement.”

As you can see, the growth of 401(k) plans and other direct contribution retirement options is encouraging for the current workforce and provides some hope for a comfortable retirement. You should look into the different 401(k) options that exist, and talk with your financial advisor sooner rather than later to set up the best configuration of your retirement options for you. I know I am soon!

If you want to read the rest of the article talking about the growth of 401(k)’s you can do so here. Also, feel free to check the archives here at Real World Really to get even more great information and advice regarding your personal finances and remember to Stumble any posts you find particularly helpful.

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