They say that an attorney who represents himself has a fool for a client — but what about those who work with retirement plans?
To start with, the vast majority of this week’s respondents (87%) had one or two workplace savings accounts, while most (58%) had one or two IRAs. There were more complicated situations: Nearly 1 out of 10 had three or four workplace savings accounts, while 17% had three to five IRAs (a quarter had no IRAs).
As for how those accounts are managed, the current workplace retirement savings account for most (59%) were invested in individual funds directed by the respondent. Approximately one in five were invested in target-date funds, one in eight had chosen a managed account, and the rest (about 8%) were in a self-directed brokerage account (SDBA) that they managed. That was the preferred approach for the vast majority — only 17% said that the choice was imposed on them by the plan design. In that group was a reader who explained, “I wish my workplace plan was as good as my clients’ plans!”
A target-date fund investor noted, “I reviewed the other options to build my own portfolio, but missing asset classes used in my managed money program, so best way to have a diversified portfolio is through the target funds.”
A respondent who wasn’t quite so “self” directed noted, “I am not really the one that directs them, though. My uncle (not a financial advisor but a retired postal supervisor) has access to both of my IRAs and both of my plans at work, and he looks at my investments each quarter and makes recommendations for changing my investment choices. He even gives me a consolidated statement of all of my accounts. It’s fun for him and takes the burden off me.”
Speaking of changing those choices, just over a third (35%) had rebalanced their account within the last year; 22% had done so in the last quarter; and roughly 9% admitted that it had “been awhile.” Among those was a reader who was retiring in two years and had attended to the allocations accordingly: “Don’t believe in watering the weeds,” the reader said.
As for the rest, their investment vehicle of choice meant that rebalancing had been done automatically.
Goals Tended?
Of course, it’s one thing to save and invest, and something else altogether to do so with a plan/goal in mind. Still 29% had done a retirement needs projection for their personal situation within the last quarter, and another quarter had done so in the past month. Almost as many said they had done so within the last year, while one in five acknowledged that it “had been “awhile.”
Speaking of saving, 35% of this week’s respondents said they were maxing out their contributions, while 5% said they were trying to do so, bounded in by the nondiscrimination testing rules. The rest — and we’re talking 60% of total respondents — either noted that they weren’t contributing the maximum, or weren’t doing so… yet.
Ignore ‘Rants’?
We also asked readers to share the one piece of retirement savings advice they give participants/plan sponsors that they most commonly ignore in their own account(s). Here’s a sampling:
- “Increase your 401(k) deferral during down markets.”
- “Don’t trade, instead diversify. Most of you don’t spend the time I do following markets.”
- “Do not focus or obsess on the balance as it fluctuates, focus on the process and your goal; I confess I peek too often, but at least I know how my participants feel and the emotions that they experience.”
- “I always tell clients to save as much as they can, diversify investments and don’t pay attention to the media.”
- “Consolidate your accounts for simplicity.”
- “I use self-directed and do have many individual securities. I would generally not suggest this option for a plan sponsor.”
- “Save as much as you can (I just got lucky).”
- “I don’t rebalance correctly, or often enough.”
- “You can't beat the market in the long run... index funds are the way to go.”
- “Keep everything where you can find it — that doesn't always happen for me personally. But at least I totally understand when they tell me they lost it! :)”
- “Max out your account. Save at least 15% of your pay.”
- “Don't take out loans.”
- “Read everything you receive, in case you have to do something.”
- “Diversify your tax structures (I need to start making some Roth deferrals!).”
Got something you’d like to add? Use the comments section below! And thanks again to all who participated in our weekly reader poll!
