Three in five 401(k) plan participants wish their employers would be a bit more proactive in educating them about their retirement plan options.
According to the “Fourth Annual 2012 DC Participant Experience Study” by KK & Company and Greenwald & Associates, 401(k) participants would appreciate if their companies provided them with more analysis, solutions and a better understanding of the tools and guidance the plan provider has to help them optimize the use of their retirement plan.
The study’s authors recommend that employers include a calculation for all retirement plan participants so they have a goal to monitor progress; implement a simple report that automatically calculates their potential retirement savings based on current age, normal retirement age, salary and current retirement savings plan; give participants the option to include other retirement savings as part of the calculation; and create an online tool that educates them on how to time retirement and how the amount of retirement deferral and investment performance impacts their retirement savings outcomes.
Additionally, a projection of how much they are on track to accumulate this goal by retirement age will clearly help participants make better-informed decisions. Three approaches to projections were tested in the survey and the one that is most preferred is a projection based on a continuation of contribution rates.