NEW YORK ( TheStreet) -- The average 401(k) account has $72,800 in it, according to a study by Fidelity Investments -- hardly enough to support a lengthy retirement. To increase savings, plan sponsors are trying a variety of techniques. One of the most promising is an effort to redesign the statements that savers receive.
For decades, a typical 401(k) statement has displayed account balance. But new approach also shows a saver the monthly retirement income that this balance would support. Someone with $50,000 might be told that the account would provide monthly retirement income of $275.
Seeing a monthly income figure could have a big impact on savers. According to a study by Principal Financial Group, participants who know their monthly income save 46% more than plan participants who don't.
"The monthly number motivates people to get in there and increase their savings rates," says Noelle Fox, a retirement analyst for Principal Financial.Fox says the monthly figures jolt people with a more realistic picture of their retirement outlooks. "Some people see that they have a balance of $50,000 and figure that is a lot of money," she says. "It is a huge wakeup call when they realize that the balance will only generate a small amount of monthly income." Many people don't need the monthly figures to understand that their nest eggs are puny. Consulting financial planners or online calculators, these savers discover that they should save $1 million or more to provide secure lifetime income.