The youngest and oldest employees were the most likely to take positive action related to their financial wellbeing during the third quarter of 2013, according to the Bank of America Merrill Lynch 401(k) Wellness Scorecard.
Since 2009, the scorecard has found that the number of plan participants who started contributing to their retirement accounts or began contributing more significantly outnumbered the people who stopped contributing or decreased their contributions.
The number of starts was 2.6 times the number of stops, while increases were 2.2 times more common than decreases for the quarter, the report found. Those under age 30 and over age 50 were responsible for the majority of positive actions in the quarter with 41 percent and 36 percent respectively. For those between the ages of 31 and 49, only 23 percent made a positive change regarding retirement savings.
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More employers are adopting plan designs that encourage employees to join company retirement plans and contribute more money over time. The report attributes much of the success in the under 30 age bracket to programs like automatic enrollment that immediately funnel new employees into a retirement savings plan.
In the third quarter, the scorecard saw a 7 percent increase over the first quarter of 2013 in the number of plans that adopted automatic enrollment. In addition, 26 percent more auto-enrolled employees increased their contribution rates than did in the first quarter. The number of plans that adopted auto increase grew 17 percent compared to the first quarter of 2013. Nearly one-third of eligible plans have now adopted auto-increase features, the company found.
Bank of America Merrill Lynch recommends that employers consider adopting a proactive communications approach that reinforces the investing message with employees who are already doing so, acknowledging the financial realities that 30- and 40-somethings face, and emphasizing the importance of retirement plan contributions to total financial wellness.
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