Current:Home > MarketsNeed a push to save for retirement? This 401(k) gives you up to $250 cash back-LoTradeCoin
Need a push to save for retirement? This 401(k) gives you up to $250 cash back
View Date:2024-12-23 16:08:26
The statistics on Americans' lack of retirement readiness can be startling, with almost 1 in 3 older workers approaching retirement without a dime socked away. Now, one company is dangling a carrot it hopes will get more people saving: up to $250 in cash if they put money into a 401(k).
The new incentive is from a fast-growing administrator of 401(k) plans, Human Interest, and focuses on a little-known portion of the Secure 2.0 law passed last year. The provision allows employers or plan providers to offer financial incentives that encourage employees to put money into their retirement plan.
Human Interest said it's the first time that a plan has offered a 3% cash-back reward to retirement savers. Though other companies may have financial incentives to boost retirement spending, it's usually through matching contributions. For instance, Robinhood sought last year to attract people with an IRA by dangling a 1% match for those who opened retirement accounts at the trading app.
The 3% cash-back plan is akin to credit card companies giving cash-back bonuses for spending, or even similar to banks that used to give toasters away to people who opened an account with them, noted Human Interest CEO Jeff Schneble. Companies have sought for years to provide other incentives to get workers to save, such as automatic enrollment or matching contributions, and yet a large segment of Americans still fail to save, he noted.
- Good savers, beware: Will you face a tax bomb in retirement?
- Inflation Reduction Act could be "game-changing" for millions of U.S. seniors
- Is retirement achievable? Investors say they'll need at least $3 million.
"There just hasn't been a lot of new innovation or thinking — it's all kind of the same stuff we have been doing for 40 years," Schneble told CBS MoneyWatch. "It works for half the people and doesn't work for half."
Plan limitations
Human Interest's plan has some limitations. For one, it's only accessible to people who work for the 16,000 companies that have 401(k) plans through the company. In other words, people who want to open up an IRA or other type of individual retirement account to get the cash-back offer are out of luck.
Human Interest is providing the $250 cash-back offer to middle- and low-income workers who earn less than $60,000, which represents roughly half of the employees who have 401(k) plans through the company, Schneble said. The company picked that number because it's about the average income for workers.
"What we saw, not surprisingly, is the savings rate goes from 80% in the top quartile [of income earners] to 20% at the bottom quartile," he added. "Those who make less, save less."
To receive the money, workers must initiate retirement contributions between June 1, 2023, and January 1, 2024, and contribute at least 8% of their salary to their savings for a 12-month period. Once the worker qualifies for the cash-back offer, they'll receive the award through a Visa or Mastercard prepaid debit card or similar gift card.
"If we could get 5% to 10% of people saving for the first time, that would be amazing," Schneble said.
- In:
- savings
veryGood! (1)
Related
- 24 more monkeys that escaped from a South Carolina lab are recovered unharmed
- Missouri sets execution date for death row inmate Marcellus Williams, despite doubts over DNA evidence
- Biden border action prompts concern among migrant advocates: People are going to have fewer options to access protection
- General Mills turned blind eye to decades of racism at Georgia plant, Black workers allege
- NATO’s Rutte calls for more Western support for Ukraine, warns of Russian alliances
- 'Splashdown confirmed!' SpaceX Starship successful in fourth test launch
- Deceased Rep. Donald Payne Jr. wins New Jersey primary
- Alaska set to limit daily number of cruise ship passengers who can visit Juneau
- 'Serial swatter': 18-year-old pleads guilty to making nearly 400 bomb threats, mass shooting calls
- Suzanne Collins Volunteers As Tribute To Deliver Another Hunger Games Novel
Ranking
- What’s the secret to growing strong, healthy nails?
- A 102-year-old World War II veteran dies en route to D-Day commemorations in Europe and is mourned
- The costs of World War II and the war in Ukraine fuse as Allies remember D-Day without Russia
- World Cup skier and girlfriend dead after tragic mountain accident in Italy, sports officials say
- Mega Millions winning numbers for November 12 drawing: Jackpot rises to $361 million
- Black Music Month has evolved since the 1970s. Here’s what you need to know
- Women's College World Series finals: How to watch Game 2 of Oklahoma vs. Texas
- Powerball winning numbers for June 5 drawing: Jackpot climbs to $206 million
Recommendation
-
The 15 quickest pickup trucks MotorTrend has ever tested
-
Officials accused of trying to sabotage Interpol's Red Notice system to tip off international fugitives
-
Trump outpaces Biden and RFK Jr. on TikTok in race for young voters
-
Security forced to step in as man confronts Chicago Sky's Chennedy Carter at team hotel
-
Benny Blanco Reveals Selena Gomez's Rented Out Botanical Garden for Lavish Date Night
-
Ex-Detroit Riverfront CFO embezzled $40M, spent funds on lavish lifestyle, prosecutors say
-
Levi Wright’s Mom Shares Gut-Wrenching Final Moments With 3-Year-Old Before Toy Tractor Accident
-
Get Rid of Excess Cuticles in 15 Seconds With This $4.97 Miracle in a Bottle