A new survey finds that 401(k) participants might save more if they had some more information at their disposal.
For example, if participants knew that their current contribution rate would replace only 50% of their income in retirement, just over one in four (41%) of them say they would increase their contribution rate. And, according to "The Guardian Small Plan 401(k) RetireWell Study 2.0: What’s Working and Not Working for Small Plan Participants", if they thought they were on track to replace 100% of their income, a quarter still say they would increase their contribution rate.
Among survey respondents, 15% were hoping to replace more than 100% of their pre-retirement income, more than a quarter (27%) to replace 100%, 13% to replace 70-100%, 18% hoped to replace 50-70%, and the remaining 19% were targeting less than 50%.
Significant majorities also indicated that they would increase their contributions if:
- they had a better sense of how much retirement income their contributions were creating (79%)
- they had a better understanding of the investments available to in their 401(k) plan (75%)
- a financial professional showed them how to invest their 401(k) (73%)
- they had better educational materials from the company that manages their 401(k) plan (69%)
- they learned that others of your age and income were saving a bigger proportion of their income than they were (69%)
Roughly a third (34%) of participants in all size plans have increased their contribution rate in their 401(k), compared with just 16% of those working for employers with fewer than 25 employees. On the other hand, 18% of those who worked for smaller employers have stopped contributing to their 401(k), compared with 10% of those in plans of all sizes.
More than half (54%) pay a “great deal” of attention to their account balance, while only about half that number (29%) say they pay a “great deal” of attention to income.
Guardian Retirement Solutions enlisted the assistance of Brightwork Partners, LLC to conduct this nationally representative, quantitative 25-minute online survey of 2,000 active 401(k) participants in November 2014.
