Savers across all generations expect to increase their 401(k) contributions in the coming months, according to the results of a new survey that examines 401(k) savers’ attitudes and behaviors.
T. Rowe Price’s third installment of its Retirement Savings and Spending survey finds that this is especially true of Millennials (ages 18-35), 45% of whom say their expected contribution rate is now higher than their contribution rate over the last 12 months. Meanwhile, 36% of Generation X (ages 36-51) respondents and 30% of Baby Boomers (age 52 or older) also say they expect to increase their 401(k) contributions.
The survey examined the attitudes and behaviors of 3,022 adults across 16 financial objectives and four areas of advice.
Though many respondents expect to put away more for retirement than they used to, the report shows that they are saving an average of 9% of their income in their 401(k), with nearly 60% of respondents saving less than 10%. That’s a slight uptick from the 8% average in the 2015 results.
Not surprisingly, the survey also reveals that the employer match is a major factor. According to the findings, the majority of individuals determine their contribution rate based on their employer match, with 65% taking full advantage of the match and 21% saying they take partial advantage. These numbers were somewhat evenly split among the generations.
Having financial peace of mind (75%), maintaining an acceptable quality of life (73%) and saving for retirement in a 401(k) (65%) were found to be among the top three major financial objectives across the generations. Contributing to an HSA and following a plan which targets a specific income for their retirement were both cited as a major objective by 42% of respondents.
When asked whether they believe they are on track to meet their financial goals, the results show a slightly more pessimistic outlook, with 33% of respondents in the 2017 survey saying either they are “not very” or “not at all” comfortable, compared to 29% who said the same in the 2015 results. This slight dip was also reflected with those who said they are either “somewhat” or “very” comfortable that they are on track, with the 2017 results showing 67%, compared to 70% in the 2015 results.
Advice Preferences
Respondents who cited a need for advice for specific financial objectives also evaluated which areas they want advice out of four possible categories: selecting investments, figuring out how much to save, tracking progress and prioritizing objectives.
When asked about the objective of saving for retirement through their current 401(k) or other workplace retirement plans, respondents gave the following rankings:
- Tracking progress toward this objective and making changes as necessary (33%)
- Figuring out how much I need to save to achieve this objective (27%)
- Selecting investments to achieve this objective (21%)
- Deciding whether this objective is more important and whether it should be funded first or later (13%)
- No advice needed (29%)
As for advisor preferences, respondents generally seem to prefer a human advisor, although a fairly large percentage indicated they would prefer a combination of a human and digital advisor, as shown below:
- Human advisor: 44%
- Combination of human and digital, automated or algorithm-driven advisor: 32%
- Digital, automated or algorithm-driven advisor: 12%
- None: 12%
Regarding their sources of advice, 67% of respondents indicated that they rely on the company that manages their 401(k) or workplace retirement plan a “great deal” or “somewhat” as the leading source to achieve their financial goals, above their employer, an FA, online tools or friends and family.
Brightwork Partners, LLC, a research-based consultancy that is now part of NMG Consulting, conducted the online survey for T. Rowe Price from March 3-14, 2017. This is the third year the survey was conducted, following the 2014 and 2015 installments.
