Participants Trending Toward a ‘Do It for Me’ Mindset

There appears to be a growing trend of 401(k) plan participants increasingly wanting more help to plan for retirement, as many feel overloaded and don’t know where to begin.  

In what J.P. Morgan describes as the “rise of do it for me,” the firm’s 2021 Defined Contribution Plan Participant Survey of 1,281 participants shows that more wish they could “push an easy button” and completely hand over retirement planning—rising to 62% of respondents in 2021, up from 55% in 2016. 

The firm notes that overarching trend of this year’s findings seems to be “give me more help”—more help with contributions, more help with investments, more help from employers and financial professionals, and more help in retirement. 

A majority (53%) of surveyed participants want help selecting their investment strategies and prefer to leave most ongoing investment decisions to experienced professionals. What’s more, the number of participants who believe their employers have an obligation to help them pick the right plan investments has steadily climbed over the years—rising from 29% in 2016 to 41% in 2021. 

The following findings suggest that plan sponsors and their advisors should feel confident in incorporating proactive investment features to help increase the odds that participants will be able to meet their retirement funding goals, the firm emphasizes.  

• More are being auto-enrolled and auto-escalated—and are okay with it. Participants’ favorable/neutral views of auto-enrollment and automatic escalation continues to rise, climbing to 87% this year. Four in 10 survey respondents were automatically enrolled into their current plan, up more than 50% from 2016. And of those who were automatically enrolled into their plan and defaulted into a TDF, a full 100% are satisfied with the action, the survey notes.  Similarly, nearly 9 out of 10 either favor or are neutral about the idea of a plan reenrollment. The number favoring this type of action jumped by 26% this year compared with 2016. 
• Participants also believe they should be saving more for retirement, but they just are not doing it. Three in four survey respondents believe they should be contributing at least 10% of their salary to be financially secure in retirement, yet 65% say they have not contributed the amount they believe they should in the past year. 
• Most participants also want help with overall financial wellness. Nearly 7 out of 10 participants believe their employer has a responsibility to help employees with their financial wellness—this finding is even higher for participants under age 30, registering at 80%.
• Most are concerned about outliving their assets and unsure about how much they need to accumulate. Approximately 7 out of 10 respondents are concerned about outliving their money in retirement, yet less than half (47%) have calculated how much they need to accumulate to last through retirement. In addition, a third are “not confident” about how to estimate how much they will have in their plan when they retire if they continue saving at the same level.  
• Many participants would welcome a post-retirement income option in their plan. According to the findings, 85% of respondents say they would likely leave their balances in their plans post-retirement if there was an option to help generate monthly retirement income. This figure grows even higher for younger participants at 91% for those ages 30-49, and 86% for those under age 30. 

And finally, while emergency savings are top of mind, saving for retirement remains a top priority. J.P. Morgan found that when asked to allocate $500 into different savings vehicles, participants allocated:  

• $197.80 to their retirement savings account; 
• $134.10 to an emergency savings account;
• $72.90 to a program to help pay down debt; 
• $60.80 to an HSA; and
• $34.40 to a transportation savings account.

However, younger participants were found to strongly favor contributing to an emergency savings account first, until it reaches a certain amount, then putting the rest into a retirement account. “Clearly, retirement remains a top priority, and emergency savings accounts may be an effective first step to get younger participants used to saving,” the study suggests, noting that participants with “healthy savings accounts are less prone to steal from their future selves by dipping into retirement savings.” 

Greenwald Research conducted the survey in January 2021 on behalf of J.P. Morgan Asset Management. To qualify, each of the 1,281 respondents had to be employed full-time at a for-profit organization with at least 50 employees, be at least 18 years old and have contributed to a 401(k) plan in the past 12 months.