T. Rowe Price: Employers committed to workers' 401k plans well into retirement
- A T. Rowe Price study showed that large employers help workers manage their 401(k) plans well into retirement as a major strategic goal. Human resources and benefits professionals also said they are committed to driving successful retirement outcomes through strategies that include matching contributions, stretch matches, automatic programs and other services
- The study revealed that 48% of plan sponsors have a formal metric system to track how prepared workers are for retirement. Employers with a metric tracking system had higher plan participation rates (63%) than those without (52%). The study surveyed 269 HR and benefits professionals, who administered 401k plans with $100 million to more than $1 billion in assets.
- Despite plan sponsors' success with helping employees prepare for retirement, 70% of respondents said that asset withdrawal (cash-outs, loan defaults, hardship withdrawals, etc.) was either a major or a minor problem, T. Rowe Price says.
Employers' continued commitment to helping workers with their 401k plans into retirement is a positive overall. A Fisher Investments survey discovered a gap between what respondents said they knew about 401ks and what their actual knowledge of their plans were. Most respondents (71%) failed the Fisher's 401(k) IQ in the Workplace Quiz. Employers can play a critical role in addressing that gap, and improving participation in their plans and employee well-being overall.
Employers can also help workers with their 401ks by providing realistic goals and planning tools as many employees wrongly think they've saved enough for retirement. A poll by BlackRock, a financial management firm, found that while 70% of respondents think they'll have sufficient retirement savings, employees might be over-confident about their ability to save. Although optimism might be incentive for meeting their retirement goals, it also can give them false hopes without a plan and guidance from their employer.
Retirement planning is a critical part of employee financial wellness, an area that is getting more attention lately as a developing part of broader wellness programs. Financial stress is distracting for employees and can affect workplace productivity, among other things. Financial health, including retirement planning and benefits, should be part of the broader wellness programs employers offer their workforce to ensure employees are fully engaged and committed.