A tactic some retirement plan providers are using as a new way to motivate 401(k) savings is relatively unsuccessful, according to findings in Employee Benefit Research Institutes 2014 Retirement Confidence Survey. As EBRI notes, the U.S. Department of Labor last year suggested that retirement plan statements display, at the top of employee statements and Web portals, the amount of monthly income their current rate of savings would translate into in retirement.
The industry research groups annual survey found that only 17% of respondents said they would change their 401(k) contributions as a result of viewing that number. There were 1,501 employees and retirees polled. This is possibly because 58% of those respondents were not surprised at the approximate monthly retirement income, the organization suggests in a statement.
Retirement adviser Dan Palmer says the retirement industry is banking on this tool to encourage more saving. In fact, he told EBA in a recent interview that he hopes this tool raises the rate of employer matching in 401(k)s, which needs to be increased, too.
EBRIs statement indicates that this is a relatively new innovation, so further evidence over time may yield different results. It is possible that these respondents current participation in employment-based plans has already provided them with a sense for what their retirement savings balances would provide, noted Jack VanDerhei, EBRI research director and author of the report, about the fact that more than half of respondents were unsurprised by their income.
Some companies are already tweaking the concept of displaying the retirement income information, like ProManage, which provides reports that suggest alternative investment options that could garner better results for the employees 401(k).
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