J.P. Morgan suggests that plan sponsors use these patterns of behavior to better understand how to help defaulted participants seek a more secure retirement. It is difficult to change participant behavior, but there are a number of things plan sponsors can do to help defaulted participants maximize the potential benefits of 401(k) investing.

Proactive auto-enrollment and auto-escalation programs improve participation rates but they need to be set at high enough levels to put defaulted participants on a secure path to retirement. That means starting the default contribution much higher than the 3 percent that seems to be the norm currently.
Effective participant communication is important in engaging participants and educating them about how critical their saving patterns are to achieving retirement success. As fiduciaries, plan sponsors need to help participants set realistic retirement goals and determine if certain Qualified Default Investment Alternatives meet their retirement goals and what the expected outcome will be.
Prudent QDIA selection must address all important factors that may affect defaulted participants' ability to achieve sufficient retirement savings. This includes an understanding of the impact defaulted participant behavior can have on potential retirement outcomes, particularly in terms of how cash flow volatility may interact with embedded portfolio volatility to compromise the probabilities of participant success, according to J.P. Morgan.

J.P. Morgan's research found that the best way to increase retirement readiness is to save more and to do that, participants must contribute enough to have adequate funding levels. How a QDIA is designed can help achieve this goal by making participants' assets work as hard as possible to capture attractive levels of return at lower levels of volatility.

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Retirees who default into investments are more varied, volatile

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