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.
- 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.
- 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.
- 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.
- 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.