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A small increase to your 401k contribution can have a big impact on your retirement savings account

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Posted at 9:30 AM, Jan 16, 2020
and last updated 2020-01-16 18:28:28-05

CLEVELAND — If you think you're great with money, join the club. According to a new study from Key Bank, three in four Americans consider themselves financially savvy and 41% would even say they're smarter than most.

But the reality is, you're probably making some money mistakes and waiting too long to save for retirement.

A Case Western Reserve University assistant professor of finance said all generations need to have a grasp on their finances but added that millennials need to understand what is driving their financial decision making.

"Simple concepts like time value of money, interest compounding, risk management, risk diversification. These are concepts everyone has to know across generations," Lakashmi Balasubramanyan, assistant professor, said.

The study revealed that one in three millennials who made a financial misstep admitted to feeling afraid of checking their bank accounts.

Balasubramanyan said saving for retirement has to start early.

"I think a lot of young people, regardless of the tool they use, have yet to embrace the idea of saving because there is the notion of instant gratification," she said.

The finance professor said everyone should consider a savings account that pays interest.

Experts also recommend the examination of your 401k account. Ask yourself, "am I contributing enough?" If your budget allows, increase your investment by 2 or 3%. The investment will add up quickly.

For more on the study from Key Bank, click here.