Participants in 401(k) plans are a feisty lot. Not only do 90 percent of them say that they'll be relying on themselves to provide the money they need in retirement, but 87 percent of them say that, after health insurance, having a 401(k) plan is the top make-or-break factor when deciding whether to accept a new job.
Yet once they get that coveted 401(k) plan, they aren't at all confident about their abilities to make the right choices, according to a new survey from Schwab Retirement Plan Services. But that doesn't mean they'll ask for help. They're more likely to get someone to change the oil in their cars (87 percent) than to ask for help in making investment choices (24 percent), and most spend more time researching new cars (55 percent) and vacations (39 percent) than the investment options available in their plans.
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So why is that? For starters, half of plan participants say that the investment information provided for their 401(k) plans is more confusing than the information for their health care benefits.
Then there's the little matter of stress. Life is full of it, and when 34 percent of participants say that figuring out where to put those 401(k) dollars ups their stress level, it's no wonder they just… don't bother. And 59 percent do not want to add that level of complication to their lives, wishing it were easier to choose the right investments.
Still, considering that most 401(k) plans offer some kind of professional personalized advice, the fact that only 23 percent take advantage of it — despite recognizing that they'd probably do much better if they did (so say 49 percent of those who don't seek professional advice) — remains something of a puzzle.
"Most people see a doctor when they're sick or a mechanic when their car isn't running, so why not seek professional help to manage something as important as their 401(k)?" said Steve Anderson, head of Schwab Retirement Plan Services, in a statement.
"In many cases, there is a significant difference between how much people need for a comfortable retirement and what they are actually saving," Anderson added. With all of the information providers have about 401(k) participants — age, salary, account balance, savings rate, and more — why leave them on their own, or lump them into target date funds based only on their age when so much more can be done to personalize their savings plans? We know that professional advice can play an important role in helping people save more to bridge the retirement gap."
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