Fourth Annual 2012 DC Participant Experience Study
CHESTER, NJ, October 2, 2012 -- One of the findings, according to the Fourth Annual 2012 DC Participant Experience Study by KK & Company and Greenwald & Associates, is that: Participants prefer more pro-active steps to increase their retirement readiness and provide them with more analysis, solutions and a better understanding of the tools and guidance the plan provider has to help them optimize the use of their retirement plan.
Almost half of participants feel they are behind schedule on saving for retirement and three in five wish their employer did more to educate them about their retirement plan. Four in five trust the recommendations of their plan provider. Four in five are very interested in learning more about retirement planning from their plan.
"The American worker is aware and concerned about their retirement. They are looking for more insights on how to prepare and mange for retirement rather than understanding the rules and mechanics of their 401k plan," said Mathew Greenwald.
Most participants are extremely or very interested in getting, on one of their statements, projections of how much they need and will have in their retirement plan at retirement age if they continued their contributions.
Clearly participants want an assessment of the adequacy of their saving for retirement. Further, it is clear that many participants have false confidence of the effectiveness of their efforts to save for retirement. Of the 54% of respondents who believe their savings for retirement are on schedule or ahead of schedule, half are over age 35 and have less than $250,000 saved in their defined contribution account (26% have less than $100,000 saved). The following responses should be considered: 1) do the calculation for all participants so they have a goal to monitor progress, 2) implement a simple report that automatically calculates their potential retirement savings based on current age, normal retirement age, salary, and current retirement plan savings, 3) give participants the option to include other retirement savings as part of the calculation, and 4) create an online tool that educates them on how to time retirement and how the amount of retirement deferral and investment performance (net of fees) impacts their retirement savings outcomes.
Additionally, a projection of how much they are on track to accumulate this goal by retirement age will clearly help participants make better-informed decisions. Three approaches to projections were tested in the survey and the one that is most preferred is a projection based on a continuation of contribution rates.
"Less than half of participants have tried to calculate the required amount to replace their salary for retirement. The question this raises is obvious: Without having a goal, how can they manage their progress and expectations?" said Kendall Kay. LLIF. "Every participant should be provided this calculation automatically if they are in a 401k plan."
Information for this study was gathered through 17-minute interviews with a total of 1,018 plan participants, using the Research Now online Panel. Interviewing took place from August 15 to August 22, 2012.
About Mathew Greenwald & Associates
Mathew Greenwald & Associates, Inc. is full service market research Company that specializes in serving the needs of the financial services industry. We have conducted customized research for more than 200 organizations. Greenwald & Associates is a member of a Research Center, in partnership with RAND, Dartmouth College, The Wharton School, Harvard University and others that is conducting research for the Social Security Administration to help enhance the financial literacy of Americans. For more information please go to: www.greenwaldresearch.com.
About KK & Company
KK & Company provides strategic planning, marketing, and business development for financial services and health care organizations. Creating customized solutions that deliver a unique and profitable competitive advantage, KK & Company's specialized knowledge of wealth accumulation, retirement income, wellness and employer markets help companies understand and meet their customers' needs. For over two decades, Kendall Kay has researched, tested, developed and monitored educational strategies, products and tools for over two million 401k participants at different Defined Contribution providers, as well as for many clients. For more information please go to: www.kaykayco.com.
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