Americans Confident in Ability of 401(k)s to Achieve Retirement Goals

New survey results confirm that a large majority of American households are confident that the 401(k) system will help them reach their retirement goals, and are overwhelmingly opposed to proposals to reduce tax incentives for retirement.

Survey results from ICI’s February 2018 research report – “American Views on Defined Contribution Plan Saving, 2017” – show that 77% of U.S. households are either “somewhat” or “very” confident that 401(k) and similar employer-sponsored accounts can help meet their retirement goals, similar to the confidence levels expressed in prior years.

That confidence level was even higher among those who currently own DC accounts or IRAs, registering at 84% in Fall 2017, but even 63% of non-owners expressed confidence in the system.

These results are part of the 10th annual update of ICI’s survey, which examines the views of more than 2,000 American adults on DC retirement account saving, as well as their reactions to possible policy changes and their confidence in 401(k) and other DC plans. The survey was fielded in December 2017 by the GfK Group.

Preference for Current Tax Incentives

In addition to meeting retirement goals, the survey confirmed a strong preference among households for preserving retirement account features and flexibility. The findings show that 91% of households disagree with the statements that the government should take away the tax advantages of DC accounts or reduce the amount that individuals can contribute to DC accounts. Similarly, 91% of households disagreed that the government should reduce the amount that employers can contribute to DC accounts for their employees.

Moreover, 82% of households with DC plans agree that the “tax treatment of my retirement plan is a big incentive to contribute.” This finding was consistent across all age and income groups, although it increased somewhat with age and was slightly higher for households with $50,000 or more of income (84%), compared to households with incomes below $50,000 (79%).

Households also have a favorable view of the investment option lineup in their DC plans. Overall, 83% of households with DC plans agree that their plans offer a good lineup. And while satisfaction was high across all age and income groups, it was slightly higher for households with $100,000 or more of income (88%) and somewhat lower for households with less than $50,000 of income (79%).

Other findings show that a strong majority of households with DC plans agree that it is important for them to have control of the investments in their retirement plan accounts. More than 9 out of 10 households agree that retirees should be able to make their own decisions about how to manage their own retirement assets and income.

Opposition to Mandates

Survey respondents also expressed strong disregard for mandated annuity options. More than 8 out of 10 households (83%) disagree with the statement that “the government should require retirees to trade a portion of their retirement plan accounts for a fair contract that promises to pay them income for life from an insurance company.” The lowest this level dropped to in the recent results was to 70% in 2012/2013.

The report does provide a caveat that surveying consumer preferences regarding annuitization is difficult “because the subject matter is complicated and may not be salient at the current time for many households.” In addition, the authors note that academic research has shown that word choice in surveys on annuities has a “dramatic impact on the perceived desirability of the annuity option.”

Post a Comment

Your email is never published nor shared. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Send this to a friend