A new survey finds there is widespread recognition of the 401(k)’s importance, but many workers are not taking full advantage of its benefits.
The nationwide survey of 1,000 401(k) plan participants, commissioned by Schwab Retirement Plan Services, finds that a 401(k) plan is considered a crucial benefit by an overwhelming majority. When asked which benefits are “must haves” aside from health insurance, nearly nine in ten respondents (87%) say a 401(k) is a “must-have” benefit – more than disability insurance (45%), life insurance (42%), extra vacation days (34%) or the ability to telecommute (15%).
Although survey participants clearly want 401(k) plans and appreciate their role in working toward post-retirement financial security, most are not using professional advice that may help improve outcomes. In fact, respondents say they are much more likely to have someone change the oil in their car (87%) than have someone help them choose their 401(k) investments (24%).
According to the survey, on average participants spend roughly the same amount of time reviewing and choosing investments for their 401(k), a lifetime savings vehicle, as they do investigating cell phones, which are often traded in from year to year. And they spend more than twice as much time researching their cars before buying than they do evaluating their 401(k) options.
“Today, responsibility for managing their own retirement investments rests squarely on workers’ shoulders,” noted Steve Anderson, head of Schwab Retirement Plan Services. In fact, the survey finds that nine in ten participants are relying on themselves for the money needed to live in retirement and a majority are using their 401(k) as their primary or sole source of retirement savings.
“With so much at stake, the industry needs to take a more active role in delivering personalized investment advice to help individuals’ 401(k)s work harder for them,” Anderson added. “One-for-all default investments, such as target date funds or balanced funds, can’t be expected to meet the individual needs of workers. The industry can do better.”