The ‘Magic Number’ for Retirement Drops to $1.26M for 2025

According to Northwestern Mutual’s 2025 Planning & Progress Study, the elusive “magic number” Americans think they need to reach to retire comfortably has gone down slightly for 2025 to $1.26 million, which is $200,000 less than the all-time high of $1.46 million the company reported in 2024.

While this news is positive, the report found that among Americans with retirement savings, one in four (25%) say they have just one year or less of their current annual income for retirement.

Other findings from the survey include:

51% believe outliving their life savings is a real possibility, and the vast majority are living with financial anxiety.
35% say they have not taken any steps to address that potential outcome.
Only 9% of Americans have 10 times their annual income saved for retirement.

What can plan sponsors do?

Partner with your financial advisor to educate employees about financial readiness topics, particularly given the recent market volatility.
Contact your recordkeeper about their existing financial wellness programs and ways to promote them.

Contact your SRC Client Relationship Manager if you’d like more ideas about addressing participant concerns.

–Chris Oneal, President, Stones River Consulting

DOL AND LEGISLATIVE CORNER
Secure 2.0: Key Provisions Taking Effect in 2025

Below are several key SECURE 2.0 provisions taking effect in 2025.

Automatic Enrollment: Beginning in 2025, except for some small businesses with less than 10 employees and a few other exceptions, new 401(k) and 403(b) plans will be required to use auto-enroll and auto-escalate provisions.

Increased Catch-Up Provision: Catch-up contributions allow participants aged 50 and older to defer additional amounts to their retirement account. The catch-up contribution is indexed to inflation; for 2025, that amount is $7500. In addition, participants aged 60, 61, 62, and 63 can make “super” catch-up contributions up to $11,250, or 50% more than the regular catch-up contribution.

Increased Access for Part-Time Employees: The work requirement of at least 500 hours of service is being moved from three consecutive years to two consecutive years to allow long-term part-time employees to participate sooner in 401(k) plans and ERISA-covered 403(b) plans.

SRC has created a handy guide on the most important provisions affecting retirement plans. Download the guide here>>

If you have any questions about SECURE 2.0 and its provisions, please get in touch with your SRC consultant.

COMPLIANCE CALENDAR
Important Deadlines to Remember

May:

16: All required Annual Plan Year data is due to Stones River Consulting to allow us to complete your tax filing by the filing deadline. If received after 05/15, a $250 rush fee will be assessed. Additional fees will apply in August if complete data is still missing.

June

30: Deadline for processing corrective distributions for failed ADP/ACP tests from plans with an EACA, to avoid an additional 10% excise tax. (TPA, Plan Sponsor, Recordkeeper)

July

15: Form 5558 filings begin for all plans that have not signed and submitted Form 5500/Form 5500-SF filings to the IRS to extend the deadline to October 15, 2024. (TPA)
31: IRS deadline for filing Form 5500 without an extension or filing Form 5558 to extend the Form 5500 filing date. (TPA, Plan Sponsor)

<DOWNLOAD THE 2025 COMPLIANCE CALENDAR>.

FRESH INSIGHTS

7 Signs Your Retirement Plan Needs an Upgrade

Retirement plans can be very complex if plan sponsors don’t have the right partner by their side to help navigate the ins and outs.

Stones River Consulting created a new guide titled, 7 Signs Your Retirement Plan Needs an Upgrade, that helps plan sponsors understand:

What the four critical areas of a retirement plan are that need to be properly managed to maintain a successful retirement plan.
Warning signs that a plan may be in danger of falling outside of compliance.
How to get help to maintain a compliant retirement plan that benefits both the plan sponsor and its employees.

To request this guide, click here>>