More than half of respondents (55 percent) to a new Fidelity survey say if it weren't for their 401(k), they wouldn't be saving for retirement.
Almost 20 percent of those in workplace plans say they don't have retirement savings outside of their retirement benefit.
"This research helps us better understand how Americans use their 401(k)s to help achieve their long-term retirement savings goals," said James M. MacDonald, President, Workplace Investing, Fidelity Investments. "It also provides an interesting snapshot of the actions of workplace plan participants in an uncertain economic climate and highlights the importance of Fidelity's wide array of financial education offerings, from online tools to one-on-one guidance."
Recommended For You
Fidelity surveyed 1,000 current and retired workplace plan participants on their attitudes and behaviors toward retirement savings. When asked about top reasons for participating in the plans, 92 percent of current workplace participants indicated it was important or very important not to lose out on company match dollars, and 90 percent felt the plans were a good tax-deferred way to save. However, economic conditions still present a challenge for many, with more than half (54 percent) of working respondents reporting they would contribute more to their 401(k)s if they could.
Company Match Often a Factor When Increasing or Decreasing Savings
In May, Fidelity reported that nearly one in 10 corporate defined contribution participants increased their contribution rate during the first quarter of 2011, the largest percentage to do so since Fidelity started tracking the figure in 2006.3 This corresponds with the survey that found more than half (53 percent) of working respondents increased their contribution rate in the last five years, despite historic market volatility and economic uncertainty.
When asked why they increased their contributions, 23 percent of working respondents said they wanted to take full advantage of employer matching dollars, and 38 percent said they had received a raise or had extra money available.
Only 23 percent of working respondents reported ever decreasing their workplace plan contribution percentage. For those who decreased contributions, 46 percent reported needing extra money, and 9 percent said it was due to the elimination of a company match. Forty percent of these respondents said they already do – or possibly will – regret the decision to decrease their retirement savings contribution.
Many Who Borrow from 401(k)s Would Not Do So Again
The prevalence of loans and withdrawals from 401(k)s is a concern, yet for some retirement investors they may be a necessity. Fidelity's survey found that nearly one quarter (23 percent) of working respondents have taken a loan from their retirement plan, with many saying they needed to do so for an unforeseen emergency. But when asked about the decision, 29 percent of these respondents indicated they would not do so again.
While Fidelity's plan data4 show a slight drop in 401(k) loans in the first quarter, the company said it's important that participants considering a loan consult with a professional in order to assess such factors as potential tax implications, fees, loss of investment gains and repayment schedule. Many plan sponsors require complete repayment of the loan within 60 days if the participant leaves the company or is laid off, which could trigger a fee and tax bill.
IRA Top Retirement Savings Vehicle Outside of 401(k) Plan
To supplement their workplace plan, 37 percent of working respondents are building retirement savings in an IRA. In addition, 33 percent are in an employer-sponsored pension plan, 28 percent have savings in bank accounts, and 28 percent have investments in stocks or bonds. Pre-retirees 55 and older are the most active users of IRAs, with 44 percent saying they utilize these retirement savings investments.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
