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J.P. Morgan Asset Management National Retirement Survey Finds Call For Help Among Workers

NEW YORK, June 12, 2013 /PRNewswire/ -- A nationwide poll conducted by J.P. Morgan Asset Management of more than 1,000 American workers participating in a 401(k) plan has found that the vast majority of savers are at a loss for how to manage retirement planning and acknowledge that they need professional help.

Reality is setting in with American workers. While half say that they would like to retire before the age of 65, only 20% believe they will realistically be able to do so.  This leaves two options: working longer or saving more.

When it comes to saving more, workers would strongly welcome help with their 401(k) and other retirement savings guidance. 

  • More than three fourths of participants (76%) say they need professional assistance with key elements of retirement planning, including how much to save and how to allocate their investments.
  • Yet despite this, almost half of workers (48%) don't have access to help through work or on their own.

Confusion about how much to save is the most pressing issue for participants.

  • About 53% estimate they will need less than 75% of their salary in retirement to live comfortably, while most financial experts suggest more will be required.
  • Only 13% believe they are on track to obtain a replacement rate of 75% or more.
  • Less than 30% of respondents are confident that their savings will last throughout their retirement.
  • Four in 10 do not have any target at all for how much to save for retirement.

Just over 40% of participants plan to "wing it" in retirement.

"Which statement best describes your retirement planning?"

  • Participants express strong interest in a number of tools that can help them make better decisions about using their 401(k) plans. Interest in a tool that projects how much will be accumulated in the plan at retirement generates the strongest interest.
  • Participants further express a great deal of interest in education about how to invest and manage 401(k) plan accumulations once they are retired. This is an area in which most participants feel they do not have enough knowledge to do an adequate job of investing and financial management. Seven in 10 (70%) are interested in obtaining guaranteed lifetime income and 23% are interested in how to invest after retirement.

"Clearly there is still more work to be done in helping participants get the most out of workplace retirement savings vehicles," said Catherine Peterson, Director of Retirement Insights at J.P. Morgan Asset Management. "These findings make it clear that workers do need help to make better decisions. We recommend at a minimum incorporating the combination of features like auto-enrollment and auto-escalation programs into plan design to drive savings rates. More targeted, personalized participant communications, particularly around retirement income projections, is another important piece of the puzzle."

Participants feel overwhelmed about making retirement planning decisions.

  • Financial pressures and paying monthly expenses register as the largest source of worry – above job security and health. Among those who worry, one-third suggest that financial pressures consume them at work often or all of the time, while another 45% say they do so sometimes.
  • Only 20% of participants felt that they could absorb the information being provided by their plan about retirement saving.  
  • Nine in 10 participants are willing to spend more time learning how to make better use of their 401(k) program. About 86% were interested in doing a financial plan for retirement.
  • Still, a significant proportion of participants do not take the time to use the information available to them to learn about the plan, and many feel utterly unable to make decisions about investing.

Additional findings:

  • A strong majority of participants review their account statements, but they rarely make changes in their investments. In fact, less than half say they know how to adjust their monthly 401(k) contributions and even fewer know how to change their investment allocation. However, three-quarters check their overall balances and almost as many examine how their account balance changed since their last statement.
  • Four in 10 have money from a prior retirement plan that they have not rolled into their current plan.
  • Target date funds are an effective way of helping participants attain an effective asset allocation and properly rebalance their portfolios. Four in five believe it is important that these plans be offered to participants.

MethodologyJ.P. Morgan Asset Management conducted 1,009 online interviews among the general population of 401(k) participants from Oct. 2-18, 2012. Respondents had to be employed full- or part-time at a for-profit organization with at least 50 employees, be at least 18 years old, and have contributed to a 401(k) in the last 12 months. 

  • Respondents were asked about how they make decisions about retirement planning and their 401(k) plan, their level of engagement in the planning process, and their preferences regarding automatic features. A series of questions also was asked to gather demographic details about respondents.

About J.P. Morgan Asset Management – Retirement

J.P. Morgan Retirement, with defined contribution assets under management of $85 billion, is a leading comprehensive retirement solutions provider dedicated to improving individual retirement outcomes. J.P. Morgan Retirement Plan Services provides bundled recordkeeping services to more than 650 clients and 2 million plan-level participants, representing more than $158 billion in retirement plan assets (as of April 30, 2013).  

About J.P. Morgan Asset Management

J.P. Morgan Asset Management, with assets under supervision of approximately $1.9 trillion and assets under management of $1.5 trillion (as of 3/31/13), is a global leader in investment management. J.P. Morgan Asset Management's clients include institutions, retail investors and high-net worth individuals in every major market throughout the world.  J.P. Morgan Asset Management offers global investment management in equities, fixed income, real estate, hedge funds, private equity and liquidity.  JPMorgan Chase & Co. (NYSE: JPM), the parent company of J.P. Morgan Asset Management, is a leading global asset management firm with assets of approximately $2.1 trillion and operations in more than 60 countries.  Information about JPMorgan Chase & Co. is available at www.jpmorganchase.com.

J.P. Morgan Asset Management is the marketing name for the asset management businesses of JPMorgan Chase & Co.

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