401(k) account holders need help
By Paula Aven Gladych
More than half of 401(k) plan account holders believe health care benefits are easier to understand than 401(k) investment options.
A study of more than 1,000 401(k) plan participants by Charles Schwab found that 57 percent of participants wish there were an easier way to figure out how to choose the right 401(k) investments. Forty-six percent don’t feel they know what their best investment options are, and one-third feel a lot of stress over correctly allocating their retirement funds.
That said, nearly 90 percent of respondents said they are counting on themselves to save for retirement. Only 5 percent said they planned to rely on the government for financial help after they stop working full-time.
Many 401(k) plans offer some type of professional advice, which can help people take better control of their investments. Of those surveyed, 61 percent said they wanted personalized advice for their 401(k). Participants would like guidance on asset allocation, risk tolerance and retirement income planning.
The survey found that retirement confidence nearly doubles when workers have the help of a financial professional. Thirty-two percent of survey participants expressed confidence in making the right 401(k) investment choices based on their own ability, compared to 61 percent if they also had the help of a financial professional.
“Getting more workers engaged in professional 401(k) advice should be a top priority for employers. We’ve seen the positive impact it can have on both behaviors and outcomes,” said Steve Anderson, head of Schwab Retirement Plan Services
Nearly three-quarters of respondents said their 401(k)s had recovered from the financial crisis about as fast or faster than expected, and 74 percent said they would rather pay low investment fees for index funds than pay higher fees for actively managed funds that could potentially outperform the market but may also carry greater risk.
Originally published on BenefitsPro.com