Participants: Investment Decisions Ok, but Worry About Having Enough to Retire
PARSIPPANY, NJ, December 5, 2006 -- Even though they monitor closely their 401k investments and feel confident they're making correct 401k investment decisions, many participants in a recent survey by New York Life Investment Management LLC (NYLIM) are still concerned their assets will not last long enough for them to retire comfortably.
According to the 2006 survey of 8,958 participants on NYLIM Retirement Plan Services' platform, 60 percent of participants agree that they're making correct investment decisions in their 401k account. But at the same time, only about half of all participants feel they know how much money they will need in retirement and less than 40 percent believe they're in a good position to meet financial goals when they retire.
Also, more than half of those surveyed agreed that "I am willing to take on substantial risk if it could mean a higher return."
"This research shows us several things - first, that by emphasizing a retirement account balance instead of the amount necessary to retire in comfort, we have all been putting the emphasis on the wrong idea," said Don Salama, senior managing director of NYLIM Retirement Plan Services. "Many of these participants monitor their investments carefully, are prepared to take some risk and feel they're making good decisions, but are still worried they won't have enough for the long haul."
Different Strokes for Different Folks
Data from the survey also showed that different participant populations, even within the same company, may need significantly different types of retirement planning tools. For instance, more than 40 percent of participants surveyed would like someone else to manage their 401k account with their input and 39 percent agreed with the statement "I tend to rely on advice from a professional financial advisor when making investment decisions about my 401k retirement account." Forty-four percent disagreed with this statement and the rest were indifferent.
Meanwhile 75 percent of participants surveyed said they enjoy learning about investing and 68 percent closely monitor the value of their 401k accounts.
"Just because participant X sits in a cube next to participant Y does not mean that they have the same ideas about and needs for retirement investing," said Salama. "This survey provides concrete evidence that we need to meet participants where they are. This means offering everything from auto features and managed accounts to do-it-yourself tools on the other end of the spectrum."
The survey was based on the responses of 8,958 defined contribution plan participants in NYLIM client plans. It was performed by ANOVA Consulting Group, a Brookline, Massachusetts-based market research and consulting firm focused on the financial services industry.
About NYLIM Retirement Plan Services
NYLIM Retirement Plan Services provides services to more than 2,100 defined contribution, defined benefit and deferred compensation plans as of October 31, 2006. With offices in Westwood, Massachusetts, and Parsippany, New Jersey, NYLIM Retirement Plan Services administers retirement programs for small, medium and large companies, multi-employer plans, and individuals throughout the United States, and is widely recognized for its leadership in bundled defined contribution and bundled defined benefit plans.
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