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We're Just Not That Into Our 401(k)s

NEW YORK (TheStreet) — When it comes long-term relationships with their 401(k)s, workers, it seems, are kind of like bad boyfriends. They're eager to get started and say the relationship is really, really important, but their attentions fade.

That's the essence of a study by brokerage firm Charles Schwab. The findings underscore the value of good "defaults" in plan design, to steer employees to sensible investment choices when they can't be bothered to do it themselves.

The survey of 1,000 workers found that 87% described the 401(k) as a "must have" benefit, ranking it above disability insurance, life insurance and even more vacation days. But employees were less likely to get professional help in choosing and managing 401(k) investments than they were to get help doing taxes or changing the oil in their cars.

"Participants spent more time researching options for a new car (approximately 4.3 hours) or vacations (approximately 3.8 hours) than researching 401(k) investment choices (approximately 2.1 hours)," Schwab said.

Read More: The New Grads' Guide to 401(k)s

"Finally, less than one-quarter of those with access to professional 401(k) advice have used it. Among those who are currently not seeking advice, roughly half believe they would achieve better investment advice if they did so."

In fairness to these less-than-attentive workers, the handful of investment choices offered in the typical 401(k) is small compared with the number of cars for sale or vacation places for rent. Still, it's easy to go wrong, stunting the investment returns over the decades. The difference between good and bad 401(k) decisions can make the difference between a comfortable retirement and one plagued with penny-pinching. The survey found workers far more likely to seek professional advice as they approached retirement, but by then it can be too late.

The survey unearthed one piece of very good news: Among workers whose employers offered matching contributions (nine out of 10 employers with plans), 86% contributed enough to get the maximum match. On the other hand, nearly a quarter had taken a loan from their 401(k), a move that can diminish returns

Read More: How We Learned to Love Target-Date Funds in a Decade

For employers, the study demonstrates the value of providing a good plan. Because workers place such a high value on the 401(k) but pay the account so little attention, providing the right features can ensure employees are not disappointed by their results.

Fees need to be kept low, plan materials need to be clearly written, sound investment advice should be offered for free or at very low cost and workers should be enrolled automatically unless they choose not to participate.

Employers who want to keep things simple can offer a selection of target-date funds that adjust routinely the mix of stocks, bonds and cash to suit each employee's likely retirement date. Target-date funds have become very common and are offered by many plan providers.

Finally, the target-date option should be the default investment choice provided to workers who don't choose to do something else. This, along with automatic enrollment, helps overcome the tendency of many inattentive workers to keep too much money in low-return holdings such as money market funds.

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