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Masses of Unengaged Retirement Savers

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Although many Americans are taking the reins on their retirement savings, they are not doing the best job and could benefit from occasional professional management.

Many Americans are taking the reins on their retirement savings, but they might not be doing the best job, according to a new survey.

Fidelity Investments found even though Americans are deferring 12% or more, on average, of their paycheck to their 401(k)s, many individuals are forgoing professional management and financial guidance to manage their own investments.

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“If 401(k) assets are not managed either by the individual or a professional, the account may be taking on too much or too little risk,” Jim MacDonald, president of Workplace Investing at Fidelity Investments, said in a statement. “And with market fluctuations over time, it may leave the individual short-changed by the time they are ready to retire.”

The survey results found 63% of respondents are taking a “Do it Yourself” approach and assuming full responsibility for their own investment decision. The 37% who take a “Do it for Me” approach are taking advantage of professional management through target date funds or workplace managed accounts.

Unfortunately, Fidelity found more than half (54%) of those who take the DIY approach is considered unengaged. These individuals have not made a fund exchange, updated their contribution investments, or sought guidance in at least 2 years.

Fidelity recommends even DIY-ers seek help at least once a year to ensure their retirement savings are still on track.

The survey results also noted employer-sponsored plans are offering enhanced design offerings, such as auto enrollment and Qualified Default Investment Alternatives. These offerings provide more options for a healthy retirement.

“The data show that millennials especially reap the benefits of 401(k) plan design features, such as auto enrollment and investment defaults,” said MacDonald. “This is important because millennials will be the first generation to shoulder the responsibility of funding the majority of their retirement on their own.”


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