COLLECTED WISDOM™ on Studies and Research focused on 401k Plans

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Report Reveals 403b Plan Sponsors Support Retirement Saving and Investing

Employers' commitment to their 403b plan participants is evident in a new report just released by the ICI. Analyzing the plan year 2020 data for large 403b plans filing Form 5500 under the ERISA, the report finds that nearly one-third of large ERISA 403b plan participants were in plans that put their employees on the path to retirement saving with automatic enrollment.

Source: Ici.org, April 2024

Why Do Some Small Businesses Offer Retirement Plans?

Numerous studies have shown that offering a retirement plan is closely related to firm size; firms with fewer than 100 employees are much less likely to offer a plan than larger firms. As a result, observers tend to dismiss small firms as a source of future growth in coverage. However, a meaningful share of small businesses do offer retirement plans. The purpose of this study is to identify the characteristics of sponsoring firms and their employees to determine which small businesses may be more likely to offer a retirement plan in the future.

Source: Bofa.com, April 2024

Nearly 2 in 3 Americans Worry More About Running Out of Money Than Death

Nearly two in three Americans say they worry more about running out of money than death with concerns about inflation, Social Security, and taxes contributing to the fear, according to the 2024 Annual Retirement Study from Allianz Life. The worry of running out of money has increased in recent years. In 2024, 63% say they worry more about running out of money than death, up from 57% in 2022. Gen Xers are the most likely to say this with 71% more worried about running out of money than death, compared to 64% of millennials and 53% of boomers.

Source: Allianzlife.com, April 2024

401k Balances Rise 14% in 2023, but Participation Rate Falls

Average 401k account balances at plans recordkept by T.Rowe Price increased by 14% over the past year to $115,000, according to the Baltimore-based company's annual benchmarking report on 401k plan design and participant behavior.

Source: 401kspecialistmag.com, April 2024

Small Business Retirement Plans: How Firms Perceive Benefits and Costs

At any given time, only about half of U.S. private sector workers are covered by an employer-sponsored retirement plan, and few workers save without one. The coverage gap, which undermines the retirement security of the nation's workers, is driven by a lack of coverage among small employers. This article presents the results of a new survey of small employers to understand why some offer retirement plans and others do not.

Source: Bc.edu, March 2024

Redefining 401k Data Collection for Racial and Gender Groups

A new study released today is shifting the way participant data is collected across the retirement planning industry. The research highlights gender and race-focused defined contribution administrative data typically found in human resource systems, with the hopes of combining it with qualitative research to better assess wellness platforms and tools for employers and participants. According to the research, data on nonwhite households remains relatively small with limited information on contributions, loans, and withdrawal and asset allocation activity.

Source: 401kspecialistmag.com, March 2024

Access to 401ks Surges Past 70 Million in 2023: Capitalize

According to the firm Capitalize, the number of private sector workers in the U.S. with access to 401k plans surged 6.35% in 2023 to reach more than 71.5 million individuals, or nearly 6 in 10 U.S. workers for the first time.

Source: 401kspecialistmag.com, March 2024

Record Number of Participants Raised Deferral Rate in 2023, Vanguard Reports

In 2023, a record-breaking 43% of participants raised their rate of salary deferral into retirement savings, marking the highest level observed by the Vanguard Group since tracking began, according to a preview released Monday of the recordkeeper and asset manager's "How America Saves" report.

Source: Planadviser.com, March 2024

Traditional Retirement Accounts Exhausted Faster Than Roths: Study

A new study finds that people who rely on "deferred tax" accounts to save for retirement may exhaust their savings faster than people who use "currently taxed" accounts. The researchers developed an experiment designed to assess how people would spend money in a deferred tax or currently taxed account. The researchers then enlisted 350 study participants, all of whom were U.S. adults over the age of 40 who had filed at least five tax returns over the previous seven years.

Source: Napa-net.org, March 2024

Plan Sponsor Attitudes Toward Retirement Plan Management and Fiduciary Outsourcing

This 18-page study measured how retirement plan sponsors view 3(16) fiduciary outsourcing as a tool to help them better manage their retirement plans. It also captured plan sponsor perspectives on how such outsourcing can help drive improved plan outcomes. The study was conducted in January 2024.

Source: Pentegra.com, March 2024

Younger 401k Participants Seek Personalization Features

Younger participants enrolled in employer-sponsored retirement plans share a greater desire for personalization, finds new research from Cerulli Associates. According to the findings, Generation Z was the most willing out of all other generations to share personal information, such as retirement savings/account balances (51%), nonretirement savings/account balances (37%), and expected retirement age (66%). Forty-five percent of Gen Z respondents added that they are "very comfortable" sharing their current and/or projected spending with 401k providers.

Source: 401kspecialistmag.com, March 2024

Race, Retirement, and the Savings Gap

Dramatic racial and ethnic disparities in retirement savings persist in the U.S., with no simple solution. This research shows that Black and Hispanic workers are lagging in plan participation and savings while also facing a greater range of competing financial priorities. The retirement industry can act now to help close the gap with thoughtful plan design, wellness and education programs, and improved data-sharing practices.

Source: Troweprice.com, March 2024

NEPC's 2023 Defined Contribution Plan Trends and Fee Survey Results

NEPC's Defined Contribution team released its 2023 Defined Contribution Plan Trends and Fee Survey results. This is the 18th annual version of the survey, which examines current plan investment trends, features, and innovations across major sectors, and how these plans have evolved over the years.

Source: Nepc.com, March 2024

TDFs Continue as Leading Investment Vehicle in DC Retirement Plans

New findings today from the NEPC show that target-date funds remain the dominant investment option among DC plans. The organization's latest Defined Contribution Plan Trends and Fee Survey, which surveyed 128 clients representing $259 billion in aggregate assets and 2.6 million plan participants, reports that 86% of respondents currently offer a TDF paired with systematic distributions to their participants. Ninety-seven percent of clients offer target-date fund options, and 96% use the vehicle as the qualified default investment alternative.

Source: 401kspecialistmag.com, March 2024

American Views on Defined Contribution Plan Saving, 2023

With millions of US households personally directing their retirement savings, the ICI has sought to track retirement savers' actions and sentiments. This 24-page report, the 16th in this series, summarizes results from a nationally representative survey of Americans aged 18 or older. The survey polled respondents about their views on defined contribution retirement account saving and their confidence in 401k and other DC plan accounts.

Source: Ici.org, February 2024

Student Loans and Retirement Preparedness

This study aims to provide better information on how student loan debt payments affect the 401k contributions of those who are contributing and what participants do with their contributions when their student loan payment status changes. It does so by looking directly at 401k plan recordkeeper data on balances and contributions of active participants linked with banking data from these same participants to see if they are making student loan payments.

Source: Ebri.org, February 2024

401k Managed Account Users Out-Saving TDF Participants

Retirement plan participants utilizing managed accounts are out-saving non-users and participants utilizing a single target date fund, according to data from Edelman Financial Engines. During the past decade, the savings rates of EFE managed account users have consistently averaged higher than non-users.

Source: 401kspecialistmag.com, February 2024

Employees See 401k Plans as Prerequisite Instead of Perk

Access to workplace retirement plans is no longer considered a job perk to employees, but a necessity instead. A new study released today by Vestwell, which surveyed 1,200 employees nationwide on savings habits, evolving benefits, and challenges, finds that 85% of respondents expect their employer to offer retirement benefits, up from 72% last year. Additionally, 89% of survey respondents say they would be more likely to continue working for an employer that offers a retirement benefit.

Source: 401kspecialistmag.com, February 2024

Advisors and Participants Don't Agree on Retirement Readiness

While plan participants think they're ready for retirement, their advisors aren't so sure. A new Allspring Global Investments' retirement survey finds a disconnect between both parties, noting that 64% of retirees and near-retirees believe they are ready for retirement, while only 40% of advisors say their clients are. This divide is even greater when it comes to retirement themes.

Source: 401kspecialistmag.com, February 2024

American Views on Defined Contribution Plan Saving, 2023

This 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 largely oppose 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 lifetime income from either the government or an insurance company. This 24-page report presents survey results that reflect individuals' responses collected during November and December 2023.

Source: Ici.org, February 2024

Auto Portability to Help Boost Wealth by $1.6 Trillion Over 40 Years

New results from the Retirement Clearinghouse's Auto Portability Simulation model further reveal the potential for auto portability to dramatically increase retirement savings. Based on new assumptions that increase the model's predictive accuracy, the firm's resulting paper reveals four key findings, including that the net incremental wealth generated by auto portability could be $1.6 trillion over 40 years.

Source: Napa-net.org, December 2023

401k Loans, Hardship Withdrawals at 2-Year High

Loan and hardship withdrawals taken from workplace retirement plans in the third quarter of 2023 hit their highest levels in more than two years, according to a report from Empower. Among a study of 5.3 million defined contribution workplace savers in Empower accounts, 0.8% took hardship withdrawals in Q3, and 2.6% took out loans from their savings. Those were the highest rates in the past eight quarters.

Source: Planadviser.com, December 2023

The Battle of Passive vs. Active Reaches New Milestone

Cerulli projections indicate that total passive mutual fund and exchange-traded fund assets will surpass total active mutual fund and ETF assets by early 2024. However, the flight toward passive may be slowing, as active management seeks ground in vehicles other than the mutual fund.

Source: Cerulli.com, December 2023

Plan Advisers Will Play Key Role in Future of In-Plan Annuities: LIMRA

Plan advisers will play a key role in in-plan annuity options' trajectory in the next 12 months, according to research by trade group LIMRA. An estimated nine out of 10 defined contribution retirement plans do not offer participants an in-plan annuity option, according to LIMRA. That has been the case for years despite a push from insurance providers for in-plan options, but 2024 may finally be a tipping point, the insurance trade group wrote in its report.

Source: Planadviser.com, December 2023

Changes in 401k Plan Asset Allocation Among Consistent Participants, 2016-2020

This 12-page paper provides an update of a longitudinal analysis of 401k plan participants drawn from the EBRI/ICI 401k database. Because the annual cross-sections cover participants with a wide range of participation experience in 401k plans, meaningful analysis of how 401k participants' asset allocations evolve over their lifecycle must examine the asset allocation of 401k plan accounts of participants who maintained accounts over all of the years being studied.

Source: Ebri.org, October 2023

New Retirement Outlook Report: A National Perspective on Retirement Readiness

The retirement readiness outlook is mixed for Americans, according to the inaugural Vanguard Retirement Outlook report. This comprehensive analysis evaluates retirement readiness for a nationally representative sample of American workers. The report is 31 pages.

Source: Vanguard.com, October 2023

2023 Alight International Workforce and Wellbeing Mindset Study

The 2023 International Workforce and Wellbeing Mindset Study is Alight's 13th annual U.S. report, examining employee wellbeing, culture, total rewards, and workplace technology. The study's goal is to understand employee perceptions to help employers optimize their employees' well-being and experiences to improve engagement, productivity, and performance.

Source: Alight.com, September 2023

Defined Contribution Plan Sponsor Survey Findings

This 24-page Defined Contribution Plan Sponsor Survey offers insights into how plans have navigated the remarkable past four years. The period began with the COVID-19 pandemic; subsequently moved through the Great Resignation, rapidly rising inflation, and elevated market volatility; and then saw the passage of the SECURE 2.0 Act. Plan sponsors appear to have emerged with an ever-expanding focus on how to help position participants for greater retirement funding success.

Source: Jpmorgan.com, September 2023

How Financial Factors Outside of a 401k Plan Can Impact Retirement Readiness

What happens to households with spending "spikes" that lack the income and cash reserves to support spending volatility? This Issue Brief provides a unique analysis of 401k plan participants' finances by linking 401k plan data with consumer banking data to better understand how 401k participants behave when faced with irregular expenses. Changes in credit card utilization, 401k plan contributions, and/or 401k plan loan use were examined after these participants experienced a significant spending spike.

Source: Ebri.org, September 2023

2023 Defined Contribution Consultant Research Study

T. Rowe Price conducted its third annual 2023 Defined Contribution Consultant Research Study to capture retirement views from the defined contribution consulting and advisory community. This executive summary features key findings related to target-date solutions, retirement income, investment trends, and financial wellness programs. Data are informed by 32 of the nation's leading consulting and advisory firms with a collective $6.7 trillion in assets under advisement.

Source: Troweprice.com, September 2023

Four Key Findings From Fidelity's Plan Sponsor Attitudes Survey

There is no shortage of interesting and relevant findings from Fidelity Investments' 14th annual Plan Sponsor Attitudes study, released today, which surveys employers that offer retirement plans using a wide variety of recordkeepers. What percentage of plan sponsors are looking to change advisors, CIT use increasing, plan design tweaks; what sponsors value most from advisors, and more from the comprehensive annual study?

Source: 401kspecialistmag.com, August 2023

Schwab's 2023 401k Participant Survey

Inflation and market volatility are impacting workers' ability to save for retirement to a greater extent than last year, according to a new survey from Charles Schwab. The annual nationwide survey of 401k plan participants finds that 62% of workers see inflation as an obstacle to saving for a comfortable retirement, up from 45% last year, and 42% say stock market volatility is an obstacle, up from 33% last year. Despite these challenges, workers are maintaining their 401k savings rates, but they feel less confident about reaching their goals.

Source: Schwab.com, August 2023

2023 BlackRock Read on Retirement Report

If the pandemic taught us anything, it's that burnout is real. Three years on, it turns out it's not just a workplace side effect. BlackRock's Read on Retirement™ survey reveals that financial burnout is on the rise, and one to watch.

Source: Blackrock.com, July 2023

Insights From the 2023 RIA Benchmarking Study

This year's Schwab's RIA Benchmarking Study highlights growth and business performance and how firms are investing in digital tools and workflows that will create greater efficiencies, increase productivity, and create capacity so firms can provide personalized services through the lens of their ideal client. More than 1,300 independent advisor firms representing over $1.7 trillion in AUM participated in this year's study.

Source: Schwab.com, July 2023

Stepping Into the Future: Employers, Workers, and the Multigenerational Workforce,

This 120-page report, a collaboration between the nonprofit Transamerica Institute and Transamerica Center for Retirement Studies, examines employers' workforce management-related concerns and how they are enhancing their business practices and benefit offerings to adapt to new post-pandemic realities. Underscoring employers' vital societal role, the report includes detailed findings about their flexible work arrangements, health and welfare benefits, workplace wellness programs, retirement benefits, and best practices for the multigenerational workforce. The report offers recommendations for employers and workers.

Source: Transamericainstitute.org, July 2023

2023 Universe Benchmarks Report

This Alight research report analyzes how defined contribution participants in 2022 were saving and investing in their retirement plans. The average plan participation fell slightly for the first time in past years, from 84% in 2021 to 83%. The average contribution rate fell from 8.6% to 8.3%, average plan balances dropped from $144,280 at the start of 2022 to $111,210 by the end of the year, the median plan balance was $23,818 (the lowest value in over a decade), and the median return for investors was -14.7%.

Source: Alight.com, June 2023

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