We all know it’s hard to get participants to focus on their retirement plans, but apparently many of them don’t even know how much they are deferring, according to a survey by T. Rowe Price. In an interview that aired on Fox Business News, T. Rowe’s John Ritter indicated this seems to be the case.
For many people, a 401(k) is not a plan, it's an event — they simply forget what they chose on their enrollment form years ago.
According to Ritter, people should be saving 15%, but two thirds of 401(k) participants are saving less than 10%. Many are still at the 3% deferral level proscribed by PPA ‘06 — which Ritter likens to going to the gym for six minutes. With 72% of people listing retirement as their top priority (according to the T. Rowe survey) and 92% contributing, people are aware and willing. But they need help making the right choices — perhaps through automatic increases, which forces them to act to opt out. Or perhaps they need to see pictures of what they look like when they go to the gym for just six minutes.
