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Workers Unlikely to Ask for 401(k) Investment Help


American workers may understand the importance of their 401(k)s, but that does not mean they are taking full advantage of plan benefits, according to a new survey.

American workers may understand the importance of their 401(k)s, but that does not mean they are taking full advantage of plan benefits, according to a new survey.

The nationwide survey from Schwab Retirement Plan Services found 9 out of 10 respdents consider a 401(k) a “must-have” benefit, far more so than disability insurance (45%), life insurance (42%), vacation days (34%), and the ability to telecommute (15%).

However, the survey found participants are not likely to ask for help managing their 401(k)s. While 87% said they would have someone change the oil in their car, just 24% said they would have someone help them choose their 401(k) investments.

“Today, responsibility for managing their own retirement investments rests squarely on workers’ shoulders,” Steve Anderson, head of Schwab Retirement Plan Services, said in a statement.

Unfortunately, the research found the average participant spends more than twice as much time researching cars before buying than they do evaluating 401(k) options. And, yet, not only are 9 in 10 relying on themselves for the money needed to live in retirement, but 401(k)s will be their primary or sole source of retirement savings.

“With so much at stake, the industry needs to take a more active role in delivering personalized investment advice to help individuals’ 401(k)s work harder for them,” Anderson said. “One-for-all default investments, such as target date funds or balanced funds, can’t be expected to meet the individual needs of workers. The industry can do better.”

Half of respondents say their 401(k) investment information is more confusing than their healthcare benefits and 59% wish it was easier to choose the right 401(k) investments. Unsurprisingly, a third of participants admit to feeling a lot of stress when they allocate 401(k) money.

However, just 23% of those with access to professional 401(k) advice have used it, and 49% of those who haven’t used advice believe they would achieve better results if they did use it. The survey did find that 6 in 10 participants are more likely to seek help the closer they get to retirement age. But getting help sooner may lead to better outcomes, according to Schwab.

“In many cases, there is a significant difference between how much people need for a comfortable retirement and what they are actually saving,” Andersons said. “With all of the information providers have about 401(k) participants — age, salary, account balance, savings rate, and more — why leave them on their own, or lump them into target-date funds based only on their age when so much more can be done to personalize their savings plans? We know that professional advice can play an important role in helping people save more to bridge the retirement gap.”

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