401(k)s Harder to Understand than Health Benefits


By SHRM Online staff August 15, 2013

Most American workers accept responsibility for financing their own retirement and are relying primarily on their 401(k) to get them there, but many lack the confidence to effectively manage their retirement savings, according to a nationwide survey of 401(k) plan participants for Schwab Retirement Plan Services, a benefits provider.

Schwab surveyed more than 1,000 workers across the country in June 2013. Key findings, as reported by the firm in an infographic and accompanying slides, include:

  • Nearly all respondents (89 percent) said they will need to support themselves in retirement; only 5 percent expect to rely mostly on government assistance.

  • 61 percent reported that their 401(k) is their only or largest source of retirement income.

  • More than half (55 percent) have increased their 401(k) contributions in the past two years, and most (70 percent) believe that their 401(k) is in better shape than ever before.

  • 74 percent would rather pay low investment fees for index funds than pay higher fees for actively managed funds that could potentially outperform the market but could also carry greater risk.

Perplexed Participants

However, investing in a 401(k) is not enough to instill confidence in many participants. For example:

  • More than half said their 401(k) is more difficult to understand than their health insurance benefits.

  • 57 percent wish there were an easier way to figure out how to choose the right 401(k) investments.

  • Nearly half of those polled don’t know what their best investment options are, and one-third are stressed out over this.

  • Most employees want professional investment advice, and their confidence nearly doubles when they seek the help of a financial professional.

Participants expressed a desire for guidance on everything from asset allocation to risk tolerance to retirement-income planning.

Related SHRM Report:

Workplace Visions: HR's Role in Preparing Workers for Retirement, SHRM Research, Third Quarter 2013

Quick Links:

SHRM Online Benefits page

SHRM Online Retirement Plans Resource Page

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