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COLLECTED WISDOM™ on Studies and Research focused on 401k PlansThis archive contains not only the most current material on the topic, but also older items that are still relevant, provide background, perspective or are germane to the topic. If you find a broken link or an items that you feel is outdate, irrelevant or no longer appropriate, please let us know.
Callan Survey: Legislation, Regulation, and Litigation Driving Change in DC PlansCallan's DC Survey provides a benchmark for sponsors to evaluate their plans compared to peers, and to offer actionable information to help them improve their plans and the outcomes for their participants. In this year's survey, which was conducted in late 2022, respondents spanned a range of industries; the top were technology, government, and financial services. Of the 99 respondents to this year's survey, 81% offered a 401k plan, 27% a 457 plan, 16% a 401(a) plan, and 9% a 403b plan. Nearly three-quarters of respondents had more than $1 billion in plan assets. Source: Callan.com, March 2023
Legislation, Regulation, Litigation Driving Change in 401k Plans: CallanLegislation, regulation, and litigation are the primary drivers for change in DC plans, according to results of Callan's 2023 Defined Contribution Trends Survey, released this week. The survey, now in its 16th year, paints a detailed picture of the challenges and opportunities that are top of mind for DC plan sponsors. Source: 401kspecialistmag.com, March 2023
What Does Consistent Participation in 401k Plans Generate? Changes in 401k Plan Account Balances, 2016-2020This paper provides an update of a longitudinal analysis of 401k plan participants drawn from the EBRI/ICI 401k database. A few key insights emerge from looking at the 3.7 million consistent participants over the four years from year-end 2016 to year-end 2020. Source: Ebri.org, March 2023
Five Notable Participant Behaviors Identified in T. Rowe Price 401k ReportWhile a new T. Rowe Price 2022 Year-End report shows 401k plan participants have largely stayed the course and not significantly changed their loan, distribution, or withdrawal behavior despite the recent turbulent market environment, that doesn't mean there aren't some interesting findings about participant behavior in the research. This article reviews five examples. Source: 401kspecialistmag.com, March 2023
DC Withdrawal Activity Remained Low in 2022: ICIDespite market volatility, inflation, and lingering concerns of a recession, recent Investment Company Institute research shows that defined contribution plan participant withdrawal activity remained low in recent years. According to ICI's research report, 4.1% of DC plan participants took withdrawals in 2022, compared with 4.1% in 2021 and 3.8% in 2020. Source: 401kspecialistmag.com, March 2023
American Views on Defined Contribution Plan Saving, 2022This survey polled respondents about their views on defined contribution retirement account saving and their confidence in 401k and other DC plan accounts. Survey responses indicated that Americans value the discipline and investment opportunity that 401k plans represent and that individuals were largely opposed to changing the tax preferences or investment control in those accounts. A majority of respondents also affirmed a preference for control of their retirement accounts and opposed proposals to require a portion of retirement accounts to be converted into a fair contract promising them income for life from either the government or an insurance company. Source: Ici.org, March 2023
Defined Contribution Plan Participants' Activities, 2022To measure participant-directed changes in DC plans, ICI has been tracking participant activity through recordkeeper surveys since 2008. This report updates results from ICI's survey of a cross section of recordkeeping firms representing a broad range of DC plans and covering more than 40 million employer-based DC retirement plan participant accounts as of December 2022. The broad scope of the recordkeeper survey provides valuable insights about recent withdrawal, contribution, asset allocation, and loan decisions of participants in these plans. Source: Ici.org, March 2023
Retirement Distribution Decisions Among DC ParticipantsAfter years -- often decades -- of saving in a DC retirement plan, what does a typical retiree do with the money they've accumulated? This 12-page paper examines the decisions made by participants ages 60 and older who have separated from service with their employer. Source: Vanguard.com, February 2023
Which Benefits Are Valued Most Depends on Age of WorkersA recently released Workplace Wellness Survey found that when it comes to attitudes toward employee benefits, there are large differences by employee age. Indeed, middle-aged employees reported being more likely than younger or older workers to be concerned about various aspects of their well-being. Older workers were, unsurprisingly, focused on retirement benefits. And younger workers highly valued help with day-to-day bills, student loan debt assistance, and career advancement opportunities. This paper explores these benefit preference differences by age in greater detail. Source: Ebri.org, January 2023
American Views on Defined Contribution Plan Saving, 2022The survey polled respondents about their views on defined contribution retirement account saving and their confidence in 401k and other DC plan accounts. Survey responses indicated that Americans value the discipline and investment opportunity that 401k plans represent and that individuals were largely opposed to changing the tax preferences or investment control in those accounts. A majority of respondents also affirmed a preference for control of their retirement accounts and opposed proposals to require a portion of retirement accounts to be converted into a fair contract promising them income for life from either the government or an insurance company. Source: Ici.org, January 2023
Survey Shows More Employees Contributing to Retirement Plans, Receiving MatchesA PSCA study shows plan participant and employer contribution rates in 2021 combined to produce an average savings rate of 13.9% of pay, an all-time high. Source: Investmentnews.com, December 2022
Work Retirement Study Shows Plan Sponsors Prioritizing 401k Plan DesignMorgan Stanley released new research from its workplace retirement study that highlights retirement plan sponsors are prioritizing 401k plan design amid challenging economic and jobs environment. While the 401k plan continues to be an essential workplace benefit to attract and retain talent, plan sponsors emphasized the need for an attractive plan with a range of features to meet the evolving financial needs of a diverse workforce. Source: Businesswire.com, December 2022
401k Plan Asset Allocation, Account Balances, and Loan Activity in 2020Key Findings: 401k plans draw in many young retirement savers and new hires. Younger 401k plan participants tend to be invested more in equities than older 401k plan participants. Ownership of investments in equities is widespread among 401k plan participants. Target date funds continue to be an often-used investment option among 401k plan participants. 401k plan loans are widely available but rarely taken. The average 401k plan account balance tends to increase with participant age and tenure. Source: Ebri.org, November 2022
Participants Admit Auto-Enrollment Kickstarts the Retirement Savings JourneyAs more employees ask for retirement planning vehicles in their employer-sponsored plans, a Principal study finds automatic features help participants achieve their largest share of retirement income. The latest research from Principal shows that over half (51%) of 725 respondents attributed auto-enrollment to kickstarting their retirement savings journey, and 81% said it helped them begin saving even sooner. Source: 401kspecialistmag.com, November 2022
Workers React to Retirement Language and ImageryOrganizations are taking a psychological approach to analyze the way Americans think about their retirement. New research from Capital Group studied close to 2,500 American adults and how they respond to retirement language and imagery, confirming a finding that the industry has understood for some time, there is no one-size-fits-all approach to retirement communications. Source: 401kspecialistmag.com, November 2022
Resilient Retirement Savers Shifting Focus to Short-Term Needs: StudyRising prices and inflation are certainly affecting American workers but despite the economic environment, Americans remain resilient. More than 63 percent of Americans are confident they are financially on track for retirement. The study analyzes the behavior of approximately 4.3 million active DC participants to better understand their savings habits and levels of involvement with retirement planning, particularly during a highly challenging economic and financial environment. Source: Businesswire.com, November 2022
How Does Local Cost of Living Affect Retirement for Low and Moderate Earners?This paper uses the Health and Retirement Study to explore how the local cost of living affects Social Security replacement rates and household behavior. In theory, labor markets with a high cost of living also offer more compensation. If this compensating differential is paid in wages, rather than benefits, it reduces the share of earnings replaced by Social Security due to the progressive benefit structure. This paper examines how important the cost of living penalty is, in practice, and whether it impacts household' saving or labor supply. Source: Bc.edu, November 2022
2022: Gender Lens in DC PlansThe adverse economic consequences of the pandemic disproportionally affected women. Women have dropped out of the workforce at record numbers to take on additional caregiving responsibilities. The study analysis shows that the participation rates of women remain lower than those of men, that women and men contribute at the same rates, women continue to invest more conservatively, women continue to claim hardship at greater rates and have higher loan-to-balance ratios than to men, and 401k balances of women continue to lag those of men. Source: Bofa.com, November 2022
2022 Participant SurveyAgainst a backdrop of rising inflation and global instability, many employees are feeling the pressure of meeting their day-to-day financial needs. That sentiment was evident in the 2022 PLANSPONSOR Participant Survey. This year, 2,301 American workers responded to questions about their financial behaviors, preferences, and attitudes; of this group, 774 full- or part-time employees were counted for being active participants in an employer-sponsored defined contribution plan. Source: Plansponsor.com, October 2022
401k Study Finds Millennials and Gen Z Take Advantage of Broader Range of Retirement Resources Than Previous GenerationsYoung workers are relying on more than their 401ks to save for retirement as other types of investments play a greater role in their long-term wealth plans, according to the annual nationwide survey of 401k plan participants from Schwab Retirement Plan Services. While the 401k remains the top retirement savings vehicle for today's workers overall, Gen Z and Millennial workers are more likely to also invest in cryptocurrency, real estate, annuities, and small businesses, unlike older generations. Source: Businesswire.com, October 2022
Invesco DC Study Reveals Majority of Employees Feel Alone in Identifying Best Retirement StrategyInvesco released findings from a new study exploring employee and employer preferences for generating long-term retirement income. The survey of more than 1,000 retirement plan participants and 100 large plan sponsors uncover concerns about generating long-term retirement income and considerations for bridging the income gap. Source: Prnewswire.com, October 2022
Four Generations of Workers Are Preparing for Retirement Amid an Uncertain FutureSeventy-six percent of workers say their life priorities changed as a result of the pandemic and 56 percent cite saving for retirement as a financial priority, according to Emerging From the COVID-19 Pandemic: Four Generations Prepare for Retirement, a survey report released by the nonprofit Transamerica Center for Retirement Studies in collaboration with Transamerica Institute. Source: Transamericainstitute.org, October 2022
Defined Contribution Plan Participants' Activities, First Half 2022Retirement saving continued to be a strong focus for defined contribution plan participants through the first half of 2022, ICI research demonstrates. ICI's study tracks contributions, withdrawals, and other activity in 401k and other DC retirement plans, based on DC plan recordkeeper data covering more than 40 million employer-based DC retirement plan participant accounts at the end of June 2022. Source: Ici.org, September 2022
Factors Contributing to Lower Retirement Confidence Among Women Who Are Not MarriedAmericans have near-record-high confidence in having enough money to live comfortably throughout retirement. However, unmarried women workers and retirees have lower retirement confidence than their married counterparts and are more likely to have lower incomes and assets. This 37-page report examines the attitudes, considerations, and behaviors surrounding the retirement of women workers and retirees of different marital statuses to provide greater insight into what can help improve women's retirement outcomes. Source: Ebri.org, September 2022
OregonSaves Has "Meaningfully Increased Employee Savings"A new study finds that OregonSaves -- launched in 2017 as the first state-sponsored retirement plan -- has "meaningfully increased employee savings," and employees opting out of the program "are often doing so for rational reasons." The study, funded by the U.S. Social Security Administration and conducted by the Michigan Retirement and Disability Research Center, analyzes participation choices, account balances, and inflow/outflow data between August 2018 and April 2020 for OregonSaves. Source: 401kspecialistmag.com, August 2022
Nearly Half of Plan Sponsors Considering Changing Advisors, RecordkeepersCompetition amongst plan advisors and recordkeepers is reaching an all-time high, with 47% of plan sponsors considering a new advisor and 48% considering a change of recordkeepers for their 401k plans. This is according to the 13th edition of Fidelity Investments' Plan Sponsor Attitudes Study, released today, which found that in 2022 plan sponsors are the most active in years in making big changes to their retirement plans. Source: 401kspecialistmag.com, August 2022
The Connection Between Emergency Savings Accounts and RetirementPlan sponsors can help drive higher retirement plan contributions from workers by offering robust emergency savings accounts that hew to their preferences, research from a pair of nonprofits shows. The research shows that for low- and moderate-income workers, access to emergency savings accounts is likely to bolster retirement contributions and provide greater financial security. Source: Plansponsor.com, August 2022
2021 Defined Contribution Consultant Research StudyRecent years have presented unprecedented challenges, and the consulting and advisory community is evolving their businesses to address both obstacles and new opportunities. T. Rowe Price, in partnership with Schaus Group, shares insights on retirement trends from their latest survey of the nation's 32 leading consulting and advisory firms that provide services to more than 33,000 plan sponsor clients and report nearly $7.2T of assets under advisement. Source: Troweprice.com, July 2022
2022 401k Participant SurveyInflation is now the top obstacle to saving for a comfortable retirement, according to a new survey from Schwab Retirement Plan Services. The annual nationwide survey of 401k plan participants finds that workers rank inflation (45%) ahead of other obstacles including keeping up with monthly expenses (35%), stock market volatility (33%), and unexpected expenses (33%). Workers believe they'll need to save an average of $1.7 million for retirement, down from $1.9 million reported in last year's survey, and just under half (47%) feel they are very likely to reach their retirement savings goal. Source: Schwab.com, July 2022
How America Saves 2022This study is an examination of retirement plan data from five million defined DC plan participants across Vanguard's recordkeeping business. Saving and investing attention is shifting to how best to provide participants with a holistic financial wellness platform, via advice, which also helps meet another challenge, offering guidance for the income needs of retirees who stay in their employers' plans. Meeting these needs, along with continually encouraging strong saving rates with appropriate investment diversification, are the primary drivers in creating successful retirement outcomes for employees. Source: Vanguard.com, July 2022
2022 Recordkeeping SurveyThe annual PLANSPONSOR Recordkeeping Survey was conducted in June via an online questionnaire. Recordkeepers of DC plans participated in the survey and provided the information outlined on the subsequent pages. The charts and profiles are aggregated and ranked by reported total assets, plans and participants. Specifically, the profiles offer a look into a breakdown of sponsor service offerings, participant services, and related offerings. Source: Plansponsor.com, July 2022
BlackRock: Read on RetirementAfter over two years of rising inflation, market volatility, and a global pandemic, savers are looking for security and guidance when it comes to retirement. The 2022 "Read on Retirement" is more comprehensive than in the past surveys. In addition to fielding data from plan sponsors, retirees, and workplace savers -- those who have access to a workplace plan -- also added are 1,300 independent savers. This new segment is comprised of people who are saving for retirement but without access to an employer-sponsored plan. Source: Blackrock.com, July 2022
How to Think About Recent Trends in the Average Retirement Age?After a century of decline, work activity among older men stabilized in the 1980s and began to rise in the 1990s. This turnaround reflected changes in Social Security, retirement plans, the nature of work, education levels, and health coverage. In response, the average retirement age for men has risen by about three years. The goal of this 10-page paper is to put this three-year increase in context. Source: Bc.edu, July 2022
Plan Participants Have Modest Retirement ExpectationsIt might be time to put to bed the cliched, sunny depictions of retirees traveling overseas or enjoying their golden years carefree on the beach, a survey from Principal shows. A key retirement goal for 71% of workers is now merely to maintain their standard of living, according to the latest update of the Principal Retirement Security Survey. Meanwhile, 44% of individuals cited splurging periodically in retirement as a priority. Between these bookends, 47% of respondents said that not outliving their savings in retirement is a top goal. Source: Plansponsor.com, July 2022
Study Finds Disconnect Between Actual and Perceived Retirement RisksRetirees face many financial risks, such as outliving their money, investment losses, and unexpected health expenses, but a new study finds that they may be overestimating some risks while underestimating others. A new study by Wenliang Hou, a quantitative analyst at Fidelity Investments and former research economist at the Center for Retirement Research at Boston College, develops a lifecycle model of a typical retired household facing five categories of risk. /p> Source: Napa-net.org, July 2022
Automatic Enrollment's Long-Term Effect on Retirement SavingThis paper finds that 401k savings plans are increasingly offering automatic enrollment coupled with higher employee default deferral rates. Automatic enrollment almost doubles plan participation and successfully gets participants who might not have otherwise saved, saving. Automatic enrollment combined with automatic escalation creates better participation and savings outcomes. Source: Troweprice.com, June 2022
The Economics of Providing 401k Plans: Services, Fees, and Expenses, 2021Key findings: 401k plan participants investing in mutual funds tend to hold lower-cost funds. The expense ratios that 401k plan participants incur for investing in mutual funds have declined substantially since 2000. The downward trend in the expense ratios that 401k plan participants incur for investing in mutual funds continued in 2021. 401k plans are a complex employee benefit to maintain and administer, and they are subject to an array of rules and regulations. Employers and employees generally share the costs of operating 401k plans. Source: Ici.org, June 2022
How America Saves 2022Using data from How America Saves, Vanguard's annual comprehensive look at Americans' retirement saving habits, Vanguard helps plan sponsors and consultants take action to optimize plan design to better serve employees through their entire investing journey. Source: Vanguard.com, June 2022
2021 Defined Contribution Consultant Research StudyThis study shares insight on retirement trends from our latest survey of the nation's 32 leading consulting and advisory firms that provide services to more than 33,000 plan sponsor clients and report nearly $7.2T of assets under advisement. The study was conducted at the end of 2021 during the continued coronavirus pandemic. Recent years have presented unprecedented challenges, and the study finds the consulting and advisory community evolving their businesses to address both obstacles and new opportunities. Source: Troweprice.com, June 2022
Understanding the New Defined Contribution LandscapeIn its 16th year, the PIMCO US Defined Contribution Consulting Study seeks to help consultants, advisors, and plan sponsors understand the breadth of views and consulting services available within the defined contribution marketplace. Source: Pimco.com, May 2022
Got a Retirement Plan? Race Plays a RoleA new study takes a close look at who these people are and shows stark differences along racial lines. A large majority of Hispanic workers in the private sector -- two out of every three -- do not have access to a pension or 401k-style plan, and more than half of Black workers do not have access. Although the numbers are lower for Asians (45 percent) and whites (42 percent), they are still substantial. Source: Bc.edu, May 2022
Small Business Owners Still Resistant to Starting a 401k Plan: SurveyAt a time when many companies are boosting 401k benefits to attract and retain employees in a tight labor market, 74 percent of small businesses are still going without any plan at all. Key findings in new research commissioned by ShareBuilder 401k show that owners believe their business is too small and that 401(k)s are too costly. The survey, that polled 500 small business owners from across the country, reveals that only 26 percent currently offer a 401k plan. Responders cited three main reasons for not starting a plan. Source: Prnewswire.com, May 2022
401k Plan Asset Allocation, Account Balances, and Loan Activity in 2019In an ongoing collaborative effort, the Employee Benefit Research Institute and the Investment Company Institute collect annual data on millions of 401k plan participants as a means to examine how these participants manage their 401k plan accounts. This 2022 report is an update of EBRI and ICI's ongoing research into 401k plan participants' activity through year-end 2019. The report is divided into four sections: the first describes the EBRI/ICI 401k database; the second presents a snapshot of participant account balances at year-end 2019; the third looks at participants' asset allocations, including an analysis of 401k participants' use of target-date, or lifecycle, funds; and the fourth focuses on participants' 401k loan activity. Source: Ebri.org, May 2022
Annual 401k Benchmarking Data on Participant Behavior and Plan Design PublishedT. Rowe Price released "Reference Point," its annual 401k benchmarking report featuring year-over-year data and analysis on participant behavior and plan design. The report is based on the firm's full-service recordkeeping client data. Key findings are reviewed here. Source: Prnewswire.com, April 2022
Employers Less Sure that Traditional Target-Date Funds Meet Employees' Retirement NeedsEmployers are also increasingly concerned about their employees not saving enough for retirement (66% in 2022 v. 57% in 2020) and risking outliving their savings (63% in 2022 v. 58% in 2020). Almost three-quarters of employers (72%) now say they are highly interested in a new generation of TDFs that gear towards some allocation of lifetime income. Here are the full survey results. Source: Tiaa.org, April 2022
EBRI: Challenges Aside, Retirement Confidence Remains HighDespite the pandemic and inflation, American workers and retirees remain optimistic about living a comfortable retirement and one key factor that has helped is having a workplace retirement savings plan. This is according to the 32nd annual Retirement Confidence Survey measuring worker and retirement confidence conducted by the Employee Benefit Research Institute and Greenwald Research. In fact, in 2022, 82% of workers who are offered a workplace retirement savings plan are satisfied with it, a finding that has remained steady from 2021. Source: Napa-net.org, April 2022
Retirement Reimagined StudyMillennials have an evolving vision of retirement, different from previous generations, according to Schwab's new Retirement Reimagined Study that uses advanced predictive modeling techniques to forecast key differences in how Millennials, Gen X, and Boomers will approach saving for and living in retirement. The first of its kind study also projects four distinct retirement personas that Millennials could fall into as many of them transition to retirement around 2050. Source: Schwab.com, April 2022
Record Growth of CITs Spurs Rebound of Contributions to Target-Date StrategiesOn the heels of releasing its inaugural Retirement Plan Landscape Report earlier this month, Morningstar today published its annual Target-Date Strategy Landscape Report, which found that total assets in target-date strategies grew to a record $3.27 trillion at the end of 2021, nearly a 20% increase over the previous year. The 2022 report also examines the growing trend of collective investment trusts as plan sponsors' preferred target-date vehicle, how fees continue to be a key driver in target-date selection, and primary differences between "to" versus "through" glide paths. Source: 401kspecialistmag.com, March 2022
Plan Sponsors Adding 401k EnhancementsEmployers are eyeing changes to their DC plans to improve their employees' retirement security and financial wellbeing and to help with recruitment and retention. In a survey of 363 DC plan sponsors representing a broad range of industries, Willis Towers Watson found that 75% of respondents made a change to their plan in the last two years and expect to make at least one change over the next two years. An additional 14% of sponsors that did not make a change over the last two years plan on making at least one change over the next two years. Source: Napa-net.org, March 2022
Study Shows the Value of DC Plans for EmployeesAn ICI survey also found defined contribution plan participants want to maintain control of their investments. Fortunately, most plans offer guardrails for those that would harm themselves by doing so. Source: Plansponsor.com, March 2022
Defined Contribution Plan Profile: A Close Look at ERISA 403b Plans, 2018This 68-page report focuses on ERISA 403b plans in 2018. It first analyzes 403b plans in the Department of Labor 2018 Form 5500 Research File. Focus then shifts to more than 6,200 audited 403b plans in the BrightScope Defined Contribution Plan Database, which typically have 100 participants or more. Source: Ici.org, March 2022
Research Finds Americans Remain Committed to Saving for RetirementDefined contribution plan participants' contribution activity remained strong through the first three quarters of 2021 according to ICI's "Defined Contribution Plan Participants' Activities, First Three Quarters of 2021." This ongoing study tracks contributions, withdrawals, and other activity in 401k and other DC retirement plans, based on DC plan recordkeeper data covering more than 30 million participant accounts in employer-based DC plans at the end of September 2021. Source: Ici.org, February 2022
American Views on Defined Contribution Plan Saving, 2021The survey polled respondents about their views on defined contribution retirement account saving and their confidence in 401k and other DC plan accounts. Survey responses indicated that Americans value the discipline and investment opportunity that 401k plans represent and that individuals were largely opposed to changing the tax preferences or investment control in those accounts. A majority of respondents also affirmed a preference for control of their retirement accounts and opposed proposals to require a portion of retirement accounts to be converted into a fair contract promising them income for life from either the government or an insurance company. Source: Ici.org, February 2022 401khelpcenter.com, LLC is not the author of the material referenced in this digest unless specifically noted. The material referenced was created, published, maintained, or otherwise posted by institutions or organizations independent of 401khelpcenter.com, LLC. 401khelpcenter.com, LLC does not endorse, approve, certify, or control this material and does not guarantee or assume responsibility for the accuracy, completeness, efficacy, or timeliness of the material. Use of any information obtained from this material is voluntary, and reliance on it should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by 401khelpcenter.com, LLC. | |||||||
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