Survey: Employees Want Fewer 401(k) Decisions

Many workers would prefer that someone else make their 401(k) savings and investment choices

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The typical 401(k) plan has about 18 investment options. Savvy and inexperienced investors alike are expected to choose among them. Account holders must also individually calculate how much they must tuck away each year to finance an unknown number of retirement years. It turns out that many workers would prefer not to have that responsibility.

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The majority of employees don’t want to decide how much they need to save in a 401(k) and how to invest their retirement stash. A recent Prudential survey found that many workers (70 percent) would be pleased if their employer automatically enrolled them in the company’s retirement account. And more than half of respondents (60 percent) would prefer that their employers fully automate retirement accounts so they don’t have to make any 401(k) decisions at all.

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The survey of 1,010 full time employees with a retirement plan at work found that 70 percent think the decisions they need to make to participate in their 401(k) are complicated. Almost half (48 percent) of the workers sought guidance from their employers to make savings and investment decisions. But 39 percent of those workers thought the plan materials they received actually make it more difficult to make 401(k) choices. Many workers said the handouts were not the correct length or detail and that the guides and tools were difficult to understand.

“Today’s workers recognize the critical role played by their employment based retirement plan and are keenly aware that the existing do-it-yourself approach simply isn’t the best way to build or achieve retirement security,” says Christine Marcks, president of Prudential Retirement. “Workers seem comfortable giving up a level of control if it might mean the potential for better outcomes over the long term.”

[See How Automatic Enrollment Affects Your 401(k) Match.]

The Prudential survey found that workers generally had a positive impression of auto-pilot retirement programs including automatic enrollment in retirement accounts (74 percent), periodic contribution increases (65 percent), and automatic asset-allocation (58 percent).

Tell us, would you prefer that someone else make your retirement account decisions?